Step-by-step plan (how much and what to do)
Determine the timeframe and plan — decide whether you are scalping, day trading, swinging, or investing; signals and risk depend on this.
Check the higher timeframe (HTF) — if the trend on the higher timeframe is up → advantage to longs; down → advantage to shorts. The trend on the higher TF is more important than minor noise.
Look at moving averages (MA) — for example, if the short MA (e.g., 15/50 EMA) is above the long one (50/200) — this is a signal in favor of long; the opposite cross is in favor of short. MAs help confirm direction and filter false signals.
Check momentum (RSI / MACD) — RSI > 70 may indicate overbought (possible bounce/short), RSI < 30 — oversold (possible long). But RSI is better used in conjunction with the trend, not as a standalone signal.
Price action analysis — support/resistance levels, market structure (higher highs/lows or lower highs/lows). Break of structure often provides a good reason to change direction.
Volume and confirmation of breakout — a breakout of a level with above-average volume confirms the move; weak volume often indicates a fake.
Check news and events (fundamentals/news) — important releases (news, reports, macro) can sharply change preference towards short or long. If major events are coming up soon — be cautious.
Determine risk before entry — how many percent of the account are you willing to risk (usually 0.5–2% per trade). Calculate position based on the distance to the stop-loss. This is a key step.
Set stop-loss and take-profit — place the stop behind the key structure/level; target levels should provide an adequate risk/reward ratio (at least 1.5–2:1).
Entry: wait for confirmation — enter on candle close / confirmed retest / limit order. Do not enter 'head-on' without confirmations.
Position management — upon reaching part of the profit, tighten the stop, scale in parts (if that’s the strategy), and fix losses according to the plan.
After sending the trade — do an analysis — what worked, what didn't; record in the journal (entry, SL, TP, R:R, emotions). Discipline wins.
Quick checklist (copy to your notebook)
Timeframe Trend HTF MA (short/long) RSI News Entry SL TP Risk %
H4 ↑/↓ 15/50: above/below 72/28 yes/no limit/market price price 1%
Simple example of position size calculation (step by step)
Assume: balance $1000, risk per trade 1% → you want to risk $10.
Entry = $50, stop = $45 → risk per unit = $50 − $45 = $5.
Position (number of units) = risk ($10) ÷ risk per unit ($5) = 2 units.
(Or formula: position_units = (account_balance * risk%) / (entry - stop))
If trading with leverage — consider margin and potential increased risk; for futures, the calculation will be different (considering the contract price and leverage).
Short safety rules
Never risk the center of your deposit; use stop-loss.
Do not trade 'on emotions' — follow the checklist.
Shorts are often riskier (potentially unlimited losses), especially without a stop and on high leverage. (General risk and positioning information can be found in risk management recommendations).