A setup is a situation you have seen often enough to have rules for: what has to be true before you enter, where the stop goes, and how you take profit. "Pullback to the 20 EMA in an uptrend after a break of structure" is a setup. "It looked like it would go up" is not.

What a setup definition contains

  1. Context: trend, range, session, higher-timeframe level.
  2. Trigger: the exact event that gets you in (a close beyond a level, a rejection candle, a sweep of a high).
  3. Stop: where the idea is invalidated.
  4. Target or management: fixed R, structure, trailing, partial exits.
  5. Filters: when not to take it (news, low volume, after three losses).

Grading setups

Not every instance of a setup is equally clean. Many traders grade each trade at entry:

Grade Meaning
A+ every criterion met, ideal context
A all criteria met, context acceptable
B one criterion weak
C taken without full criteria

Graded for a few months, the journal usually shows that A+ and A trades carry the profit and C trades give it back. That is a free improvement: stop taking C trades.

Testing a setup

A setup becomes trustworthy when it has its own record: at least 30 instances, a positive expectancy in R, and results that hold across months. A playbook is the collection of setups that passed that test.

In SetupBook

Setups are recorded as strategies (tags such as Breakout, Pullback, FVG or your own) plus a setup quality of A+, A, B or C on every trade. Analytics breaks results down by strategy and by setup quality, and each strategy in the Playbook shows its own trade count, win rate, average R and net result.