This website or its third-party tools use cookies which are necessary to its functioning and required to improve your experience. By clicking the consent button, you agree to allow the site to use, collect and/or store cookies.
Please click the consent button to view this website.
I accept
Deny cookies Go Back
  • Price Action Trading Course
  • Trading Setups
  • Topics ↓
    • Price Action Trading
    • Day Trading
    • Trader Development
    • Site Map
  • TSR Trading Guides
  • Resources
    • Udemy Trading Course
    • Trading Books
    • Trading Indicators
    • Forex Tester 4
    • NinjaTrader & Kinetick
  • Member Login

Trading Setups Review

Trading Strategies, Guides, and Articles for Active Technical Traders

You are here: Home / Trading Articles / Day Trading Setup Evaluation Cycle

Day Trading Setup Evaluation Cycle

By Galen Woods in Trading Articles on July 23, 2013

For day traders, evaluating trading setups in real-time is a fast and almost subconscious process. Hence, day traders must focus on post-trade evaluation to improve their day trading performance.

However, day traders often neglect to evaluate their trades ex-post. Day traders tend to think that their job is over after the trading session closes. As a result, they overlook the critical day trading setup evaluation cycle.

Day Trading Setup Evaluation Cycle

Record Reasons For Your Trades

You must have your reasons for taking each trade. Having reasons is not enough. Write them down.

For instance, you took a 9/30 trading setup as prices found support at the daily pivot level. It is also a two-legged pullback from the day’s high in what seemed like a strongly trending session.

Pen down these reasons.

However, do not let this record-keeping affect your trade execution. Quickly scribble your reasons for taking the trade, and refocus on the ongoing trade.

Bear in mind that you should write down your reasons right after you decide to take the trade setup. You must record them before the trade is over. We do not want the result of the trade to taint your original reasons for taking the trade.

You may have good reasons for making a losing trade or ridiculous reasons for entering a winning trade.

In any case, for your day trading setup evaluation, you need to know the real impetus for taking each trade. Hence, you must record our reasons as soon as possible.

Ensure Consistency in Your Trades

Before you analyze a trade setup, make sure that it is consistent with your day trading plan.

A trade that is inconsistent with your trading plan is a rogue trade. Rogue trades should not be evaluated.

Admit that it was a mistake, and work on your discipline to follow your trading plan.

Need help with discipline? Take a look at The Disciplined Trader by Mark Douglas.

Think of why you took the rogue trade but DO NOT check it for price action nuances.

For productive day trading setup evaluation, you must compare apples to apples.

If you planned to take 9/30 trades but ended up taking a trade based on a moving average channel, you have lost the basis for comparison.

Start comparing after you have picked out the apples.

Evaluate and Refine Trades

Examine the reasons you wrote down earlier. Good reasons generally lead to profitable trades.

Do trades that bounced off pivot levels do better?

Are two-legged pullbacks superior to one-legged pullbacks?

Keep probing your reasons for taking each trade. This is a crucial step to build your confidence as a discretionary day trader. This step is also a chance to confirm your understanding of price action.

However, avoid hasty conclusions based on a few recent trades. You always need a decent sample size before coming to any conclusion.

Remember that we are not looking for the perfect setup. We are looking for factors to help us avoid bad trades, not to eliminate losing trades.

Bad trades are not losing trades. However, taking bad trades over time does make you a loser.

Complete The Day Trading Setup Evaluation Cycle

To complete the cycle, you must consider our analysis result in your future search for trading setups.

For instance, if your study concludes that two-legged pullbacks do better, then you should give more weight to setups with two-legged pullbacks.

You can make use of this evaluation cycle not just for live trading, but also when you’re trading in simulation mode.

For independent day traders, the ability to self-learn is essential. And the day trading setup evaluation cycle is the best self-learning process.

Read more about Day Trading, Trader Development, Trading Psychology

Serious Traders Only!

Day Trading With Price Action – A complete course that teaches you the art of price action trading.

Perfectly structured with step-by-step guides to help you understand the principles of price action analysis.

Click here for the course syllabus

More From Trading Setups Review

Trading With Consecutive WR7 Patterns

Active Trading with the StochRSI Indicator

3 Powerful Tips to Improve Your Trading, Backed by Science

Trading Course Banner

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *


Search Trading Setups Review

Get a Free Course Chapter from Galen Woods' Day Trading With Price Action Course [PDF]

Plus, our latest trading guides and tips in right your inbox.

Recommended For You

10 Quotes to Help You Trade Like Stoics

3 Lessons For Day Traders From Finance Professors

Trading Pullbacks Using Trend Lines and Price Channels

9 Tips to Improve Your Trading Willpower

A Candlesticks Trading Strategy With Mountains, Rivers, Crows and Soldiers

How To Analyze Price Action With Keltner Channel

7 Top Audiobooks To Boost Your Trading Mindset (Get Two Audiobooks Free)

Trading Course Banner

Trading Setups Review

  • About Us
  • Contact Us
  • Advertise With Us
  • Privacy Policy
  • Affiliate Disclaimer
  • Full Risk Disclosure

Learn More

  • Day Trading With Price Action Course
  • TSR Trading Guides
  • Trading Setups
  • Trading Articles
  • Trading Books
  • Site Map

Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.


The website contents are only for educational purposes. All trades are random examples selected to present the trading setups and are not real trades. All trademarks belong to their respective owners. We are not registered with any regulating body that allows us to give financial and investment advice.


Trading Setups Review © 2012–2021