That said, certainly we can say that a perfect setup is one that represents a valid instance of your trading edge, to the point where you have no doubt that the setup is worth trading. Perhaps the best way to know if you should trade or not trade is just to be fully prepared before you start trading. In my article on high frequency vs. low frequency trading, I discuss how it’s a proven fact that people become less risk adverse after a winning trade and more risk averse after a losing trade, even though the potential risk per trade has not changed.