Setup Grades (A, B and C Setups)
Many traders grade setups by how well they match their criteria: an A setup meets every condition, a B setup most, a C setup only some. Grading helps decide position size, or whether to trade at all.
Not every trade that fits your strategy is equally good. Setup grading sorts opportunities into A, B and C quality based on how many of your criteria they meet. The grade then decides whether you trade at all and how much you risk, so your best ideas get the most capital.
- Reading time
- 3 min
- Also called
- A+ setups, Trade grading, Setup quality score
- Updated
Setup grades in plain words
Conviction is higher when a trade ticks several of the boxes your analysis looks for.1
Smaller lot sizes let you scale each position to how confident you are and to market conditions.2
Alpari warns of the reverse pattern under stress: setup quality goes down while traders keep trading, which grading is meant to stop.3
How to grade setups
List your criteria
Write the factors your Trade Setup and Entry Trigger needs, such as trend, level and trigger.
Score each trade
Count how many criteria are met before entry.
Assign a grade
For example: all met = A, most met = B, few met = C.
Link grade to size
Size each trade by its grade, within your Position Sizing rules — small lots make that easy.2
Use a checklist
Apply the grading the same way every time, so emotion doesn't creep in.4
Review by grade
Track Expectancy separately for A, B and C trades.
Worked examples
Example 1 — A setup
Full sizeA hypothetical trade meets all five criteria.
| Grade | A |
| Risk | 1R |
| Result | +2R |
High conviction comes when a trade meets several of your factors, so it gets full planned risk.1
Example 2 — B setup
Half sizeA hypothetical trade meets three of five criteria.
| Grade | B |
| Risk | 0.5R |
| Result | −0.5R |
Scaling size to conviction kept the loss on a weaker setup small.2
Example 3 — C setup skipped
SkippedA hypothetical trader sees a setup meeting only one criterion and passes.
| Grade | C |
| Risk | 0 |
Skipping it avoids the pattern where setup quality goes down while trading carries on.3
Graded vs ungraded trading
| Aspect | Graded | Ungraded |
|---|---|---|
| Trade selection | Criteria-based | Feel-based |
| Size | Matches quality | Same or random |
| Review | Results by grade | One blended number |
| Weak setups | Smaller or skipped | Taken at full size |
Where setup grades help
Sizing
Linking Risk per Trade to quality.
Selectivity
Cutting low-quality Day Trading entries.
Reviews
Comparing Win Rate by grade.
Discipline
Keeping Trading Discipline when bored or tilted.
Advantages and disadvantages
Advantages
- Puts more risk on the best ideas.
- Makes trade selection explicit.
- Shows which grades actually pay.
- Reduces impulsive low-quality trades.
Disadvantages
- Grades can be inflated in the moment.
- Criteria take time to define.
- Small samples per grade mislead.
- Varying size adds complexity.
Going deeper
Read as far as you need. Each level builds on the one before it.
Conviction from criteria
Beginner
IG links high conviction to trades that meet several of the factors in your analysis, which is the basis of an A grade.1
Sizing by grade
Intermediate
Small lot sizes make it practical to size positions by grade and conditions.2 Keep the largest size within your normal risk limit.
Guarding against drift
Advanced
Alpari observes that setup quality goes down during emotional trading.3 Reviewing Expectancy by grade shows whether B and C trades deserve capital at all.
Common mistakes
Grading after entry
Grade before you trade.
Calling everything an A
Be strict.
Sizing C trades fully
Weak ideas need small or zero size.
Never reviewing grades
Check that A trades really do better.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Grade setups before entry.
- Base grades on written criteria.
- Scale size to grade within limits.
- Skip or shrink weak setups.
- Review results by grade.
Frequently asked questions
How many grades should I use?
Should I ever trade C setups?
Can grades change during a trade?
Further learning
- Trade Setup and Entry Trigger
Defining the criteria.
- Position Sizing
Turning grades into size.
- Expectancy
Testing each grade.
- Trading Plan
Writing the grading rules.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- IG. Keeping track of your trading performance (opens in a new tab) Checked .
- CMC Markets. Lot Size in Forex: Complete Guide to Position Sizing (opens in a new tab) Checked .
- Alpari. Revenge trading: what it is and how to stop (opens in a new tab) Checked .
- IG. The Essential Trading Checklist (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.