Free course · Stock Trading · Intermediate
Hands Off the Buy Button: Filtering Weak Setups and When to Sit Out
Filtering weak setups is a skill you can write down and check. The course builds a filter that says no to most trades, rules for trading smaller or not at all, and a way to grade the trades you passed on.
Who it is for
Active traders who take too many trades and want a written filter that says no before the order goes in.
By the end you can
- Test any setup for trend, location and room to run, and measure that room in R
- Write a pre-trade filter in which any one failed check ends the trade before it starts
- Cut dollar risk by a set fraction when market or personal conditions turn against you, and know when to take no trades
- Log skipped setups, score them in R and change the filter one rule at a time
The lessons
- I What Makes a Setup Weak: Trend, Location and Room to Run
What makes a trade setup weak: checking trend alignment, where the entry sits against support and resistance, and the room to the next obstacle, measured in R.
About 12 minutes, with a quiz at the end
- II A Pre-Trade Filter That Turns Down Most Setups on Purpose
How to build a pre-trade filter: trend, level, a 2R minimum, liquidity, earnings dates, total open risk and a one-sentence reason, where any failure means pass.
About 12 minutes, with a quiz at the end
- III Market Conditions That Call for Smaller Size or No Trades
When to trade smaller size or sit out: choppy index action, your own drawdown, FOMC and CPI weeks, crowded earnings, thin holiday sessions and your own state.
About 12 minutes, with a quiz at the end
- IV Grading Your Passes: Reviewing Skipped Setups Like Real Trades
Reviewing skipped setups like real trades: log each pass with its reason, score the hypothetical outcome in R, and adjust the filter one rule at a time.
About 11 minutes, with a quiz at the end
Twelve trades in a week, each risking $300, is $3,600 of risk put on in five sessions. Now suppose half of them were setups you would have skipped on a calmer day. That’s $1,800 of risk spent on trades you didn’t really believe in.
The course is for active traders who recognize that week. You already use stops. You think about risk in dollars. You keep some kind of journal, even a messy one. What most trading plans leave out, and what the course supplies, is a written way to say no before the order goes in, along with a way to check afterward whether saying no cost you anything.
What to have ready
Bring your watchlist. Bring your trading journal too, ideally with a few weeks of entries in it.
The lessons use hypothetical stocks and round numbers, and each one asks you to run the same test on your own charts and your own past trades, which is where the habit forms. Keep a notebook or a spreadsheet handy for logging skipped setups. It gets used from the middle of the course onward.
How to work through it
Take the lessons in order. The course starts on the chart, with the marks of a weak setup, then turns those marks into a written pre-trade filter that adds the checks a chart can’t show, such as earnings dates and your total open risk, before stepping back from the single trade to the week around it and the conditions in the market and in your own account that call for smaller size or no trades at all. It ends by treating skipped setups as trades in their own right. They get scored in R. The filter gets tested against evidence.
Each lesson closes with a short quiz.
Work the arithmetic before reading the explanations. Then use the lesson on your watchlist for a week, if you can, before moving on. A filter that has only been read is still a draft.
What the course leaves out
No indicators are named. No scanning software is covered. Trend, levels and room to run are read from price itself, so the tests work with whatever charting tool you already use. Short setups take the same tests in mirror image, though every worked example is a long trade to keep the arithmetic simple. Position sizing appears only where it touches the filter: the position size calculator handles the arithmetic, and the course on risk rules that protect trading capital covers sizing and drawdown limits in depth.
Where to go after
Put the filter under pressure. Green Light or Walk Away gives you setups described in words and asks whether to take them. The column on swinging the range or standing aside carries the sit-out question into sideways markets. For the measure the whole filter leans on, the concept page on the reward-to-risk ratio works through it with examples.
Readers also ask
How do I know if I am overtrading?
Look at your journal. If many trades have no written reason, if losses cluster in choppy weeks or after a losing streak, or if you often enter setups that offer little room before the next obstacle, you are probably taking trades a written filter would reject. Counting how many trades would have failed a simple checklist is a good first test.
Does taking fewer trades mean making less money?
Not necessarily. Each trade you skip removes its possible loss as well as its possible gain. If the setups you turn down would have netted close to zero after slippage, skipping them costs little and frees attention and risk budget for the setups that do clear your checks. Grading your passes is how you find out which case applies to you.