The condition is the container for the setup and the setup is the container for the entry, thus an entry cannot be valid if it is not within a valid setup, and a setup cannot be valid if it is not within a valid condition.
It may seem obvious that a sell setup should occur within bearish conditions in order to have a higher probability of success but sometimes confirmation bias clouds our vision causing us to consider buy setups in a seller’s market. This is a technique for framing entry confirmation within a setup and framing a setup within the appropriate market conditions.
Condition-Setup-Entry Workflow
Identify the current market direction on the Higher Time Frame (HTF) (ex. Daily or H4) to identify if a Buying or Selling Condition is present. Identify areas of imbalance and supply & demand points of interest (POIs) within the most recent impulsive wave that created a BOS. I reference supply & demand because I use that in my trading, but this applies to any rules based method of trading.
Look for a valid setup on the Setup Time Frame (STF) (ex. H4 or H1) within the context of a HTF buy or sell condition as long as the HTF buy or sell condition is valid. If there is a valid STF setup within a valid HTF condition, proceed to step 3. If not, wait for a valid STF setup to form within a valid HTF condition.
Wait for an Entry Confirmation on the Entry Timeframe (ETF) (ex. M15 or M5) and execute the trade when you have entry confirmation within a valid setup.
I like this too. I would very much like to see an expansion of this to include a secondary entry signal that would confirm the setup. In addition, I would also like to see a business process flow extended to trade management. Entry is just the start. How to manage the trade to maximize the profit potential within the overall trading strategy could lead to a full lifecycle trading plan that would benefit many members struggling to establish their own plans. Well presented, thankyou
I understand what you’re saying. Don’t undervalue the decision to enter or sit on your hands. That decision helps keep you out of low probability trades to begin with.
It depends on which trend price is reversing from.
Here is a reversal Condition-Setup-Entry Model example that might be helpful for visualization (price path is color coded for Condition, Setup, Entry).
Let me answer this carefully because the nuances of trading and the trend itself is more complex than a yes or no answer. There must be context for a trade. To randomly try to pick a top or bottom would be disastrous. To trade from a top or bottom based on the context of market structure, for example, can have merit.
Example of Trading a Reversal from Bearish to Bullish based on context:
Daily Timeframe Condition: Downtrend but Supply is failing to create a Lower Low after a Lower High
15 Minute Entry: Enter at 15 Minute Demand zone at or adjacent to the 4 Hour Demand zone when there is confirmation of price making Higher Lows and Higher Highs.
In this case trading a trend reversal is appropriate because of context:
The Condition is valid - Market structure is turning Bullish and Supply failing
The Condition contains a valid Setup on the 4 Hour - Buy from 4 Hour Demand zone if it is respected
The Setup contains valid Entry confirmation - 15 Minute Market Structure has shifted bullish at the 4 Hour Demand zone, 15 Minute Demand zone formed and respected. Enter on the retest of the 15 Minute Demand zone in this example.
What if the Condition is a very choppy sideways market?
Unless your strategy has setups that cater to ranging/consolidating/sideways markets, there is nothing more to do except wait for a Condition to develop that can contain a valid Setup. If there is not a valid Setup, there should not be any consideration for an Entry.
Thanks for asking a great question and I hope this answers it.
the post 