How to Use Your Trading Journal to Find Your Best Setups
June 27, 2026
Most traders run several setups without ever knowing which ones actually carry their account. They have a vague sense that the breakout play "feels good" and the fade "gets them in trouble," but it's a hunch, not a number. A journal turns that hunch into evidence — and the evidence is often surprising.
The method is straightforward: tag every trade with the setup you played, then group your history by setup and compare the results. Once you can see win rate and expectancy per setup laid side by side, the decision about where to focus your size and attention practically makes itself.
Step 1: tag every trade by setup
The whole method depends on one habit — naming the setup on every trade. Keep the list of setup names short and stable: "ORB breakout," "VWAP reclaim," "failed auction fade," whatever your actual playbook contains. Resist inventing a new label for every trade, because if every trade is its own setup, you can never group anything. Five to ten named setups is plenty for most traders.
Discipline here matters more than precision. If you're honest that a trade was really a bored, no-setup click, tag it "no setup" rather than dressing it up as something from your playbook. Those untagged or "no setup" trades often turn out to be a quiet drain, and you can only see that if you label them truthfully.
Step 2: group by setup and compare expectancy
Once you have a sample, group the trades by setup and pull two numbers for each: win rate and expectancy (average profit or loss per trade). Win rate alone will mislead you — a setup can win often and still lose money if its losers are large — so expectancy is the figure that decides whether a setup earns its place.
A typical, illustrative result looks like this: a breakout setup wins only 45% of the time but has strongly positive expectancy because the winners run; a counter-trend fade wins 65% of the time but has negative expectancy because the occasional loser is enormous. Eyeballed live, the fade felt like the better setup because it "won more." Grouped in the journal, it's revealed as the one quietly bleeding the account. This is the exact gap between win rate and profit factor that our [profit factor explainer](/blog/what-is-profit-factor) covers in depth.
Treat small samples cautiously — a setup with eight trades behind it isn't telling you much. Wait for a reasonable sample per setup before acting on its numbers, especially for setups you trade rarely.
Step 3: cut the losers, size up the winners
With the setups ranked by expectancy, the action is simple and slightly uncomfortable: stop trading the setups with negative expectancy, and put more size and attention on the ones that consistently make money. Most traders resist this because the losing setup is often the one they find most exciting or the one their identity is attached to. The journal's job is to overrule that attachment with data.
This is also where position sizing stops being arbitrary. If one setup has clearly higher expectancy and a robust sample, it's the rational place to carry your larger size, while marginal setups get small size or get cut. Sizing to your edge — rather than to your mood or conviction in the moment — is one of the highest-leverage changes a journal makes possible.
Step 4: slice by session and time of day
Setup performance isn't uniform across the day. The same breakout that prints during the New York open can be a chop-machine in the lunch lull. After you've grouped by setup, slice each setup by session — Asia, London, NY open, NY afternoon — and you'll often find that a setup with mediocre overall numbers is actually excellent in one window and terrible in another. The fix isn't to abandon the setup; it's to only trade it when it works.
These slices compound. "VWAP reclaim, NY open only" might be your single best edge, hiding inside an all-day average that looked unremarkable. A [trading journal](/trading-journal) that lets you filter trades by setup and session is what makes this analysis a few clicks rather than a weekend spreadsheet project — and FundedNotes computes win rate and expectancy per group automatically from your imported trades.
Frequently asked questions
How do I find my most profitable trading setup?
Tag every trade with the setup you played, then group your history by setup and compare expectancy (average profit per trade) for each. The setup with the highest expectancy over a reasonable sample is your best edge — which is often not the one that wins most often.
Should I judge a setup by win rate?
No. Win rate alone is misleading because a setup can win often while losing money on large losers. Use expectancy or profit factor, which account for the size of winners versus losers, to decide whether a setup actually makes money.
Why slice setups by time of day?
Because the same setup can be excellent in one session and terrible in another. Slicing each setup by session — NY open, lunch, afternoon — often reveals that a mediocre overall average hides a strong edge in one specific window you should trade and a weak one you should avoid.
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