Path one: understand the instrument
Before finding an entry pattern, establish whether you are studying a cash asset, future, fund or CFD. Read the underlying asset, contract multiplier, settlement currency and trading hours from its specifications. Two similarly named symbols may have different ownership rights, costs and expiries. The eight market guides help you ask the right questions before comparing prices.
Path two: prices and costs
Bid is the buying side of the market and ask the selling side; their difference is the spread. Commissions, overnight financing and currency conversion may add costs. Compare two trading arrangements using the same position size and holding period. A smaller spread does not necessarily mean a lower total cost, particularly when a position remains open for several days.
Path three: orders and execution
A market order does not guarantee a specific price. A limit order constrains price but may remain unfilled. A stop enters the execution process when its trigger condition is met, and the final price may differ from the intended level. Check the product documentation for the trigger-price basis and time-in-force rules; matching button names do not establish identical behaviour across services.
Path four: read price behaviour
Start the price-action course with highs and lows, trends and ranges; then study support, resistance, breakouts, pullbacks and candles in that context. A pattern without its location and invalidation condition is not a trading plan. Extract two scenarios from each chart: what would you do after confirmation, and what must change if the idea becomes invalid?
Path five: calculate position size
Hypothetical example: equity is $10,000, risk budget is 1% and the entry-to-stop distance is $2 per unit. The loss budget is $100 and theoretical size before costs is 50 units. Assuming $10 in total fixed costs leaves $90 for price movement and a size of 45 units. These figures are neither a risk recommendation nor product specifications.
Path six: practise without hindsight
On a historical chart, hide the future and write the entry, exit and no-trade conditions using only information available at that moment. Then inspect subsequent candles. Practice success is not just hypothetical profit: adherence to the original rule matters too. Include costs, slippage and changing market conditions in your assessment, and avoid selecting only examples that worked.
Journaling and weekly review
For each example, record the symbol, time, market context, decision reason, initial risk, net outcome and execution errors. At the end of the week, group trades by scenario and identify ambiguous rules. If you change a rule, record its version and date so results from different rules are not mixed. A single good or bad week is insufficient evidence on its own.
Final exercise and next step
For a hypothetical linear instrument, use an entry of 100, a stop at 97 and a target at 106. Risk per unit is 3 and potential reward is 6, giving a pre-cost reward-to-risk ratio of 2 to 1. That ratio does not indicate the probability of success. Reassess it with costs and possible slippage, then read the relevant market guide, study price action and complete the downloadable checklist.