Scenario Planning in Trading: How to Prepare for Both Outcomes

Jasper Osita - Market Analyst

2025-12-04 09:50:29

Learn how to think in multiple outcomes so the market never surprises you again.

Scenario planning is the bridge between analysis… and wisdom.

It’s the skill that turns a trader from reactive to prepared - from emotional guessing to structured anticipation.

Most beginners plan for one outcome and feel betrayed when price does something else.

Professionals plan for both outcomes - bullish and bearish - and simply follow whichever one the market chooses.

This module teaches you how to build that mindset.

A mindset where nothing surprises you.

Where every move has a place.

Where every scenario is expected.

Where emotional pressure dissolves because you already accounted for it.

This is the module where you stop predicting…

and start preparing.

Why Most Traders Feel “Attacked” by the Market

If you’ve ever thought:

“Why did it go the opposite way?”

“The market is hunting me.”

“My analysis was right… why did I still lose?”

“If it just continued, I would’ve been profitable.”

this module is for you.

The problem is not the market.

The problem is the single-scenario mindset.

Beginners get emotional because they only prepare for one version of the future.

Professionals are calm because they expect all versions of the future.

You’re not here to guess.

You’re here to react with clarity.

This skill is reinforced heavily in price-action thinking such as

How to Think Like a Price Action Trader,

but this module gives you a more powerful, bigger-picture approach.

The Market Always Has Two Sides

Every moment in the market holds two possibilities:

1. Bullish Continuation or Reversal

Expansion → pullback → continuation

Expansion → liquidity grab → reversal

2. Bearish Continuation or Reversal

Same dynamic but flipped.

Beginners hate this because they want certainty.

Professionals love this because it gives structure.

This aligns with SMC concepts like

Accumulation, Manipulation, Distribution,

where markets constantly cycle through opposing phases.

Your job is not to pick the right side.

Your job is to build both maps.

The 3 Pillars of Scenario Planning

1. HTF Bias

What is price trying to do?

Reclaim?

Break?

Reverse?

Continue?

Use tools from

Multi-Timeframe Analysis

to build your bias first.

2. Key Inflection Points

Find the levels where price decides:

Previous day high/low
Session high/low
FVG boundaries
Order blocks
Liquidity pools

These are the crossroads.

3. Two Roadmaps

At every level, create:

If bullish → what should happen?
If bearish → what should happen?

Your goal is not to be right.

Your goal is to be ready.

Scenario Planning Removes Emotional Trading

Imagine this:

Price suddenly breaks down.

A beginner panics.

A pro says:

“That’s Scenario B. Expected.”

Imagine price wicks above your level.

A beginner thinks the market is hunting them.

A pro says:

“Classic liquidity grab. That’s Scenario A’s alternate path.”

Imagine the market consolidates.

A beginner forces entries.

A pro says:

“This is the no-trade scenario I mapped out."

Scenario planning gives you:

emotional insulation
clarity under pressure
discipline by structure
reduced hesitation
reduced FOMO

This connects heavily with Trading Psychology: Controlling You,

but here you’re applying psychology to actual market behavior.

How to Build a Two-Scenario Playbook

For each session or trading day:

1. Write your HTF bias

Preferably based on:

structure
liquidity
macro narrative

2. Identify your key levels

Mark liquidity, OBs, previous highs/lows, and FVGs.

3. Build Scenario A (Bullish)

Includes:

what must happen
what invalidates it
what confirms continuation
what signals reversal

4. Build Scenario B (Bearish)

Same structure.

5. Map Your Triggers

Use confirmation models like

OB + FVG + Liquidity Sweep

for your entry points.

6. Define Your “No-Trade Zone”

This is where beginners blow accounts.

Pros avoid it.

The Psychological Power of Expectation

When you expect both sides:

fear declines
FOMO disappears
impulsive clicks fade
hesitation drops
confidence rises
your trades feel “obvious”
your risk management becomes disciplined

Why?

Because your brain is no longer shocked.

Scenario planning trains emotional neutrality, which aligns perfectly with concepts in

The Zen of Trading.

This module changes your internal dialogue from:

“Why did this happen?”

“There it is.”

Your emotional world becomes calm - because structure replaces surprise.

Why Scenario Planning Makes You More Profitable

You reduce unplanned losses.

You stop entering in the “unknown zone.”

You reduce bad timing.

You don’t chase because both directions are mapped.

You increase high-quality trades.

Because your system is now reactive, not predictive.

You learn to let price come to you.

Scenario A and B both require patience.

This pairs perfectly with

Managing Imperfect Entries

because planning improves timing before you even click.

The Daily Scenario Planning Template

Use this every session:

Bias:

Key Levels:

Scenario A (Bullish):

If this happens → I expect ___
Confirmation → ___
Invalidation → ___

Scenario B (Bearish):

If this happens → ___
Confirmation → ___
Invalidation → ___

No-Trade Zone:

Potential Targets:

Preferred Entry Triggers:

This becomes your pre-market compass.

Sample Scenario Planning using Gold

Most traders understand the idea of “bullish vs. bearish,” but they don’t know how to structure those scenarios like professional analysts.

To make this real, let’s walk through the exact type of scenario planning used in institutional-style market reports - the same structure you’ll see in the recent ACY article,

XAUUSD Forecast – Gold Bulls Eye All-Time Highs.

Instead of guessing where gold might go next, the article lays out:

the macro narrative
the key drivers
the levels that matter
and most importantly…
two clear scenarios - bullish continuation and bearish pullback

This is scenario planning in action.

Here’s how to do it yourself.

How to Perform Scenario Planning (Step-by-Step, Using Gold as an Example)

1. Start with the Narrative (What’s pushing the market?)

Professionals begin with context, not candles.

In the gold forecast example, the narrative includes:

expectations of Fed easing
softer inflation readings
safe-haven flows
slowing U.S. economic data

This macro context sets the bias - not the chart.

Your job:

Before drawing arrows, ask:

“What is the market responding to right now?”

This reduces emotional trades and aligns your decisions with what institutions care about.

2. Identify Your Key Levels

In the sample gold report, the analyst highlights:

all-time high zone
recent breakout levels
near-term support
liquidity zones above prior highs

These levels form the decision points for your scenarios.

Your task:

Mark 3–5 levels where price must react.

These are your inflection points.

3. Build the Bullish Scenario (Scenario A)

Look at how clean and structured the bullish case is in the gold forecast.

A bullish continuation scenario will look like:

If price holds above support → higher timeframe order flow remains intact
If bullish momentum stays → target the next liquidity pool
If macro continues dovish → buyers maintain control

In narrative form (as the article does):

“If buyers hold above support and maintain momentum, price is likely to retest the all-time high and seek liquidity beyond it.”

This is Professional Scenario A.

Your rule:

Scenario A should describe what must hold and what must continue for the trend to remain intact.

4. Build the Bearish Scenario (Scenario B)

Professionals don’t pretend the market must go up.

They define exactly what conditions flip the narrative.

In the article, the bearish scenario is clear:

failure to hold support
rejection from resistance
loss of bullish momentum
catalysts that could trigger profit-taking

In narrative form:

“If price breaks back below support, the next downside target becomes the liquidity pocket near the previous breakout.”

This is clean and objective.

There’s no prediction - just structure.

5. Add Confirmation Triggers for Both Scenarios

This is where beginners fall short - they write scenarios but never define how they'll know which one is playing out.

Use tools from the confirmation framework like:

The Confirmation Matrix

For Scenario A (Bullish):

bullish engulfing
sweep + FVG
retest of support
break of short-term structure

For Scenario B (Bearish):

bearish engulfing
break of structure down
failed retest
liquidity grab into resistance

This is where execution becomes simple - because you’re only responding to triggers.

6. Define Invalidations Clearly

Professionals always define where a scenario dies.

This eliminates biased thinking.

Example from the gold analysis:

Bullish invalidation: break below near-term support
Bearish invalidation: reclaim of the broken level

When you include invalidations, you no longer cling to your bias.

7. Put It All Together - Your Daily Scenario Map

Just like the XAUUSD Forecast: Gold Bulls Eye All-Time Highs:

Scenario A - Bullish Continuation

If gold holds above near-term support and maintains momentum, expect continuation into the all-time high region and potential liquidity sweep above it.

Confirmation: bullish impulse + FVG + break of short-term structure

Invalidation: sustained break below support

Scenario B - Bearish Pullback

If gold rejects the high and falls back below support, expect a pullback into the previous breakout zone.

Confirmation: bearish engulfing + BOS down

Invalidation: reclaim of rejection zone

This is how professionals think.

Not guessing.

Not hoping.

Not reacting emotionally.

Preparing. Mapping. Executing.

Just like the market analysis reports you see every week.

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Check Out My Contents:

Beginners Path

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Risk Management

The real edge in trading isn’t strategy - it’s how you protect your capital:

Suggested Learning Path

If you’re not sure where to start, follow this roadmap:

Start with Trading Psychology → Build the mindset first.
Move into Risk Management → Learn how to protect capital.
Explore Strategies & Tools → Candlesticks, Fibonacci, MAs, Indicators.
Apply to Assets → Gold, Indices, Forex sessions.
Advance to Smart Money Concepts (SMC) → Learn how institutions trade.
Specialize → Stop Hunts, News Trading, Turmoil Navigation.

This way, you’ll grow from foundation → application → mastery, instead of jumping around randomly.

Follow me for more daily market insights!

Jasper Osita - LinkedIn - FXStreet - YouTube

This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.

Tác giả

Jasper has been in the markets since 2019 trading currencies, indices and commodities like Gold. His approach in the market is heavily accompanied by technical analysis and of course, supported by fundamentals. He has a background in trading proprietary firms and has been teaching students how to navigate themselves in the markets from basic to advance concepts.

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