An example of a BUY trade
A full breakdown: context, entry, boundary, result.
See what a well-founded trade looks like from context through to conclusion.
Step 1 of 3
HH
An uptrend: Higher High + Higher Low.
A specific situation: EUR/USD, M5. This is not a recommendation and not a forecast, but an example of how an idea is stated.
- Context
- — European session, no news due shortly
- Structure
- — Upward — two higher highs and a higher low
- Level
- — Price has come back to the zone the previous move started from
- Confirmation
- — The correction faded — the bodies shrank, a long lower wick in the zone
- Decision
- — BUY, expiry 15 minutes (3 M5 candles)
- Invalidation
- — A close below the previous low
Note the order. Context and structure first, then the level, then the confirmation — and only at the end the direction and the time. Reverse that order and you get arguments fitted to a decision already made.
The trade size here does not depend on how good the setup looks: it is calculated from the balance by the 1–2% rule.
Now the most important part. This trade could have closed at a loss — and that would not have made it a mistake. The mistake would be a trade with no invalidation, no level, or an expiry that does not contain the idea.
Key takeaways
- The order of analysis: context → structure → level → confirmation → decision.
- The trade size does not depend on how good the setup looks.
- A well-founded trade can close at a loss and still have been the right decision.
A note from Leon Mercer Academy
Fill in the six rows before entering, not after. The hardest row is the invalidation: if it will not fill, there is no idea.
The usual mistake
Choosing the direction first and then looking for arguments. Arguments are always found — which is exactly why that order is dangerous.
A practical example
Find a similar structure on your own instrument over the past week: a higher high, a higher low, a return to the zone.
Write out all six rows of the table above for that situation in the journal. If even one row is empty, there is no setup.
On risk
The example is educational. A similar situation recurring does not guarantee a similar result: the market is probabilistic.
Lesson 6 of 15 in “YOUR FIRST TRADE”