Strategy guides

Five chart setups, with the rules written down

For each one you learn when it applies, where to enter, where the stop goes and when to leave it alone. You study them after the risk modules, and practise on a demo account first.

Join the course See all five

Education only. Trading carries a real risk of loss.

Setup 1 of 5

Breakout

RangeTarget 108.80Entry 105.00Stop 103.10

Teaching example with made-up prices. The lines show where each setup's rules put the entry, stop and target.

The five setups

One at a time, rule by rule

Each setup has four questions you answer before a trade. Does it apply here, where do I get in, where do I get out if I'm wrong, and is this one I should skip?

01 / 05

Breakout

What it is

Price keeps stalling under the same level, then closes above it.

RangeTarget 108.80Entry 105.00Stop 103.10

Teaching example. Made-up prices.

When it applies: Price has tested the same ceiling three or more times without closing above it.
Entry: On the close of the first candle that finishes clearly above the ceiling.
Stop: Just under the low of that breakout candle.
Skip it when: The breakout candle is so long that the stop ends up far below your entry, or the ceiling has only been tested once or twice.

02 / 05

Pullback to support

What it is

An old ceiling breaks, and price comes back down to test it from above.

SupportTarget 116.00Entry 111.60Stop 109.40

Teaching example. Made-up prices.

When it applies: Price broke above a clear level and is now pulling back to it.
Entry: When a candle bounces off that level and closes higher.
Stop: Below the support zone, so a clean break back under it takes you out.
Skip it when: Price drops straight back through the old level without pausing. The level is no longer holding as support.

03 / 05

Range bounce

What it is

Price swings between the same floor and ceiling. You buy near the floor.

FloorCeilingTarget 53.60Entry 51.30Stop 49.80

Teaching example. Made-up prices.

When it applies: Price has turned at the same floor and ceiling at least twice each.
Entry: After a candle near the floor closes back up.
Stop: Under the floor. The target sits just below the ceiling.
Skip it when: A candle has already closed below the floor, or the floor and ceiling sit so close together that there is barely any room to the target.

04 / 05

Trend continuation

What it is

A strong move up pauses in a small, tight drift lower, then carries on.

Target 28.80Entry 25.60Stop 24.00

Teaching example. Made-up prices.

When it applies: After a strong run up, price drifts lower in a narrow channel.
Entry: When a candle closes above the top line of that channel.
Stop: Under the lowest point of the pause.
Skip it when: The pause gives back more than about half of the run up. That is a reversal starting, not a small rest.

05 / 05

Moving-average pullback

What it is

In an up-trend, price dips to its moving average and turns back up.

Moving averageTarget 71.30Entry 67.90Stop 66.20

Teaching example. Made-up prices.

When it applies: Price is trending up and has held above its moving average.
Entry: When price touches the average and the next candle closes higher.
Stop: Below the low of the dip.
Skip it when: Price has already closed below the moving average, or the average has gone flat and is moving sideways.

Position size

Every setup is sized the same way

The setup tells you where the entry and stop go. It never tells you how much to buy. That comes from one sum: the dollars you are willing to lose, divided by the distance from entry to stop.

$100 ÷ 1.90 = 52 shares

Example using the breakout chart above.

Open the risk calculator

Same risk, five setups

Example: $10,000 account, 1% risk = $100

Position size for each setup with $100 at risk, using the made-up prices from the charts
Setup	Entry	Stop	Distance	If stopped
Breakout	105.00	103.10	1.90	$98.80
Pullback to support	111.60	109.40	2.20	$99.00
Range bounce	51.30	49.80	1.50	$99.00
Trend continuation	25.60	24.00	1.60	$99.20
Moving-average pullback	67.90	66.20	1.70	$98.60

Five charts, five share counts, and the same loss of about $100 each time a stop is hit. Prices are the made-up ones from the teaching charts.

FAQ

Questions about the setups

The breakout. Its rules are the easiest to see on a chart: a ceiling that price keeps hitting, then a close above it. Once you can spot it and plan the stop on a demo account, move on to the pullback and the rest.

Trading involves risk of loss. This is education, not financial advice.

Make your next trade a planned one.

Start with the risk modules, then work through the setups at your own pace. Plans start at $39.

Join the course Compare plans

Trading involves risk of loss. This is education, not financial advice.

Photos on this page by Aleš Čerin and Azwedo L.LC on Unsplash.