As I evolve and fine tune the trading methodology I’ve presented on this blog, I’ll post summaries or checklists such as this one to hopefully simplify and clarify the methodology.

Trade Setup
1. Price is near an SR.


2. Price is potentially forming a well defined higher low (for a long) or a lower high (for a short).
3a. Price has paused for two or more bars near SR.
3b. OR price has formed a hammer candle (for a long) or a hangman candle (for a short).
4. Risk is acceptable versus the potential gain.

Trade Trigger
4. Trigger price is above the SR for a long or below the SR for a short.
5a. Price break outs of the consolidation area created by the pause in price
5b. OR price breaks the high (for a long) or low (for a short) of the previous bar.

Stop
6a. Set outside other side of pause consolidation area.
6b. OR other side of SR (if farther away).

Targets
7a. Set at or before SR levels in the direction of the trade.
7b. OR if there are no SR levels, use Fibonacci projections from the current price swing.