Building a Trade Idea Generation System

A 3-Step Process in Systemising your Trades

Systemising your trading process saves time and also helps in making more informed decisions, identifying potential trades more efficiently, and applying a consistent approach to your trading. 

Think of it as creating your own trading SOP, much like McDonald’s has done to achieve global success. 

Despite opinions on their food, their exemplary systemised approach ensures efficiency and consistency—a principle that traders can learn from.

Step 1: Screening

The first step is to narrow down the vast ocean of opportunities to those worth your time and analysis. This step is crucial because your resources—time, attention, and capital—are limited.

Use primary filters to decide whether a deeper analysis is warranted. These filters can include volatility, average true range (ATR), news catalysts, earnings announcements, higher timeframe charts, and distance from VWAP (Volume Weighted Average Price).

The goal here is to be selective, focusing only on markets or opportunities that pass your initial criteria. Remember, the default should always be “no trade” unless a compelling case presents itself.

Step 2: Analysis

Once a potential trade passes the screening phase, it’s time for a more detailed analysis. This step involves a systematic approach to gathering and evaluating all relevant data. Consider factors like economic calendars for news, underlying trends from higher time frames, price action, and supply and demand imbalances.

A structured chart analysis process should include checks on higher timeframe trends, recent day’s action, overnight price action, price position relative to key levels, technical patterns, and ATR. The aim is to build a general understanding of the market condition and adjust your strategy accordingly.

Step 3: Trade Idea Generation

Having identified a market to trade, the next step is to formulate your trade idea. This involves creating a clear thesis, understanding the counterarguments, and determining the best entry and exit points.

Considerations include risk management strategies like stop loss positions, target levels, and whether the trade is a short-term opportunity or has the potential to be a “runner.”

Define what specific conditions or patterns will trigger your entry into a trade and how you will manage the trade once it’s live, including whether to trail your stop, scale in, or scale out.


While having a structured process is ideal, trading is not a one-size-fits-all endeavour. Flexibility and discretion play critical roles in adapting to market changes and unforeseen events. The key is to balance a structured approach with the flexibility to make adjustments based on real-time market conditions and your evolving trading style.

In essence, developing a trade idea generation system is about making smarter, more consistent trading decisions. 

By systematically screening, analysing, and generating trade ideas, you can create a repeatable process that not only enhances your efficiency but also improves your effectiveness as a trader.