The Proper Trading Steps: A Top-Down Approach That Actually Works

Most traders lose money because they skip steps. They see a setup on the 15-minute chart and enter immediately without understanding the bigger picture. They don't know where the 4-hour trend is going. They haven't marked key levels. They're guessing.

Profitable trading follows a process—a top-down approach that builds context before execution. You start big, zoom in progressively, and only enter when all timeframes align.

This is the proper trading sequence. Follow it every single time.

Step 1: Start on the 4-Hour Timeframe

The 4-hour chart is your roadmap. This is where you see the bigger trend, the major structure, and the overall market direction. Without this context, you're trading blind.

What you're doing here:

Mark up the overall market structure.

Identify the trend. Is the market making higher highs and higher lows (uptrend)? Lower highs and lower lows (downtrend)? Or is it bouncing between support and resistance with no clear direction (consolidation)?

Draw your key levels—major support and resistance zones where price has reacted multiple times. These are the battle lines. When price approaches these levels, something significant happens.

Mark swing highs and swing lows. These are your structural anchors. They define where momentum shifts occurred and where they're likely to shift again.

Check the RSI on the 4-hour.

Look at where the RSI is sitting. Is it above 80% (overbought), below 20% (oversold), or somewhere in the middle?

Tally the buy and sell points on this timeframe.

If you're in an uptrend and the RSI is showing oversold conditions near support, that's a potential buy zone. If you're in a downtrend and the RSI is overbought near resistance, that's a potential sell zone.

You're not entering here. You're building a thesis. "The 4-hour chart is telling me buyers are in control, and we're approaching a support level where the RSI suggests sellers are exhausted."

This is your bias. This is the direction you're looking to trade.

Step 2: Drop Down to the 1-Hour Timeframe

Now that you have your 4-hour context, you zoom in to the 1-hour chart. This timeframe refines your thesis and shows you how price is behaving as it approaches the key levels you identified.

What you're doing here:

Mark up the structure on the 1-hour.

Identify the trend within the bigger 4-hour trend. Sometimes the 1-hour will be moving counter to the 4-hour (a pullback within the larger trend). That's fine. You're looking to see how price is setting up.

Draw support and resistance levels that are relevant on this timeframe. These might be smaller zones than what you marked on the 4-hour, but they matter because they show where price is reacting right now.

Check the RSI on the 1-hour.

Is the 1-hour RSI confirming what the 4-hour is telling you? If the 4-hour RSI is oversold and the 1-hour RSI is also oversold, you have alignment. Both timeframes are saying the same thing: sellers are exhausted.

Tally the buy and sell points on the 1-hour.

If the 4-hour suggested a buy and the 1-hour is showing the same bias—price approaching support with an oversold RSI—you're building stronger confirmation.

If the 1-hour contradicts the 4-hour (4-hour says buy, but 1-hour shows overbought RSI and price rejecting resistance), you wait. Conflicting signals mean the setup isn't ready.

You're still not entering. You're refining. You're making sure the smaller timeframe supports the larger timeframe's thesis.

Step 3: Drop Down to the 15-Minute Timeframe

This is where you execute. The 15-minute chart is your precision tool. You've already identified the direction (4-hour) and refined the setup (1-hour). Now you're looking for the exact entry, stop loss, and take profit.

What you're doing here:

Mark up the structure on the 15-minute.

Identify immediate support and resistance. These are the levels that matter for your actual trade execution. Where is price right now? What's the nearest level it's reacting to?

Check the RSI on the 15-minute.

Is the 15-minute RSI showing the same story as the 1-hour and 4-hour? If all three timeframes show oversold conditions at support, you have triple confirmation. That's a high-probability buy setup.

Tally the buy and sell points on the 15-minute.

Mark exactly where buyers or sellers are stepping in on this timeframe. This is the zone where you'll look for your entry.

Step 4: Find Your Take Profit

Now that you know your direction and your entry zone, you need to identify where you're exiting.

Use levels or Fibonacci retracements for this.

If you're using levels:

Look at the next major resistance level (for a buy) or support level (for a sell) on the 15-minute chart. This is your first take profit target.

For stacked take profits, identify multiple levels between your entry and the furthest resistance/support. Set TP1 at the nearest level, TP2 at the mid-point, and TP3 at the furthest level.

If you're using Fibonacci:

After price retraces and you're entering on the bounce, you use the Fibonacci extension tool to project where the next move will travel.

Here's how: Draw your Fib extension from the start of the original move to the end of the original move, then to where price retraced to. The tool automatically shows you extension levels—127%, 161.8%, 200%—which are where price is likely to reach as it continues in your direction.

For a buy: You're projecting upward. Set TP1 at the 127% extension, TP2 at 161.8%, TP3 at 200%.

For a sell: You're projecting downward. Same levels—127%, 161.8%, 200%.

These extension levels represent where the move will likely exhaust based on the Fibonacci sequence. They're not random—they're mathematically derived projections that align with how markets naturally move.

Keep your take profits realistic.

Whether you're using levels or Fibonacci extensions, your TPs should make sense based on the structure you've marked. Don't set TP3 at 500 pips when the nearest major resistance is only 150 pips away. Set your targets where price has actually shown it will react—previous highs or lows, major support or resistance zones, or where the Fibonacci extensions land if they align with structure.

Your take profits are projections, not guarantees. Set them where probability is highest, not where your greed wants them to be.

Step 5: Find Your Entry

With your take profits identified, now you look for your precise entry point.

Where to enter:

If you're buying, you want to enter at support with bullish confirmation. Wait for a rejection wick, a bullish engulfing candle, or clear buying pressure showing that support is holding.

If you're selling, you want to enter at resistance with bearish confirmation. Wait for a rejection wick, a bearish engulfing candle, or clear selling pressure showing that resistance is holding.

The entry is not arbitrary. You're entering at a level that all three timeframes have confirmed is significant, with RSI backing showing momentum is shifting, and with price action showing the actual reversal is happening.

Don't enter early hoping the level holds. Enter when you see proof that it's holding.

Step 6: Set Your Stop Loss

Your stop loss goes just beyond the level that would invalidate your trade idea.

For a buy:

Place your stop loss just below the support level you're entering at. If support breaks, your thesis was wrong, and you exit immediately.

For a sell:

Place your stop loss just above the resistance level you're entering at. If resistance breaks, your thesis was wrong, and you exit.

Your stop loss should be tight enough that you're not risking more than 1-2% of your account, but wide enough that normal market noise won't stop you out prematurely.

Step 7: Enter Your Trade

Now—and only now—do you execute.

You've checked the 4-hour structure and RSI. You've refined on the 1-hour. You've identified your exact entry, stop loss, and take profits on the 15-minute. Everything aligns.

You enter your trade with confidence because you've followed the process.

You're not hoping this works. You know you've done the analysis. You've stacked confirmation across three timeframes. You've identified your risk and reward. You've entered at a precise level with clear invalidation criteria.

This is proper trading.

Why This Process Works

It eliminates impulsive entries.

You can't enter on a whim when you're required to check three timeframes, mark structure, assess RSI, and identify precise levels. The process forces you to think.

It builds confluence.

When the 4-hour, 1-hour, and 15-minute all say the same thing, you have significantly higher probability of success than trading off one timeframe alone.

It defines your risk before you enter.

You know your stop loss, your take profits, and your risk-reward ratio before you click buy or sell. There's no guessing after you're in the trade.

It creates consistency.

Every trade follows the same steps. You're not reinventing your process each time. You're executing a proven sequence.

The Reserve Approach: Process Over Impulse

Trading isn't about catching every move. It's about catching the right moves—the ones where the structure, the momentum, and the levels all align.

Start on the 4-hour. Build your thesis. Drop to the 1-hour. Refine your thesis. Drop to the 15-minute. Execute your thesis.

Mark structure. Check RSI. Tally buy and sell points. Find take profits. Find entry. Set stop loss. Enter.

Every time. No exceptions.

This is how you trade with discipline. This is how you stop losing money on random setups and start making money on calculated decisions.

What This Looks Like in Practice

Example: Bullish setup

4-hour chart:

• Market structure: Uptrend (higher highs, higher lows)
• RSI: Sitting at 25% (oversold)
• Key level: Support at 1.2000
• Bias: Looking for buys

1-hour chart:

• Market structure: Pullback within the uptrend, approaching 1.2000 support
• RSI: At 22% (oversold, confirming 4-hour)
• Nearest level: Minor support at 1.2010, major support at 1.2000
• Confirmation: 1-hour aligns with 4-hour bias

15-minute chart:

• Market structure: Price testing 1.2000, showing bullish rejection wicks
• RSI: Crossing back above 20% (confirming buyers stepping in)
• Entry: 1.2005 (just above support after bullish engulfing candle forms)
• Stop loss: 1.1985 (just below support)
• TP1: 1.2050 (nearest resistance on 15-minute)
• TP2: 1.2100 (Fibonacci 127% extension)
• TP3: 1.2150 (major resistance on 1-hour)

Decision: Enter the buy at 1.2005. Risk = 20 pips. Reward = 145 pips total across three TPs. Risk-reward ratio exceeds 3:1. All timeframes align. Trade executed.

The Reality Check

This process takes time. You're not entering trades every hour. You might only find 2-3 high-quality setups per week that meet all the criteria.

That's the point.

You're not here to trade constantly. You're here to trade correctly. Quality over quantity. Confluence over convenience.

Follow the steps. Every time. No shortcuts.

Start on the 4-hour. Drop to the 1-hour. Execute on the 15-minute. Mark structure. Check RSI. Find your exits. Find your entry. Set your stop. Then—and only then—do you enter.

This is proper trading. This is how you win.

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