Basics of the Story

Where skill in the Micro-Level of writing is important to keep your reader from putting your book down in disgust or frustration, Mid-Range writing skills are, in my experience, what keeps them involved in your writing. Mid-range skills are what makes a reader not want to put a book down, and what makes them daydream about your writing at work, and hurry home to pick up where they left off.
At its most basic level, these are the skills that keep your reader wondering 'what's next?'

A: Conflict
1. Rising and falling conflict

Pitfalls:
-Too few conflicts: A classic problem. The more you like a character, and the more potent you tend to make them, and the more potent they are, the easier it is for them to overcome whatever obstacles spring up in front of them. Sadly, obstacles that are easily overcome aren't interesting. But that's boring. The thing to keep in mind is that in writing, nothing good comes easy. A genius who easily solves a series of riddles that saves the entire human race is less moving than a mentally challenged child who spends years studying and training so that he can come in third in a chess tournament.
-Attempting to maintain a constant pressure: In all but the shortest of stories trying to establish one conflict and maintain a constantly growing pressure around that is nearly impossible. Creating a series of conflicts surrounding the central conflict is more feasible, and, frankly, usually a lot more interesting.
-Peaking early: When you break a conflict into multiple facets, try to make each of the small conflicts grow in size. Think of it like a fight movie, if you open up with your hero fighting six black belts at once after having been stabbed twice in the chest, you don't want the final fight seen to be your protaganist beating the crap out of a drunk in a bar. There's very little tension there. Now, there are exceptions, of course. If the story is about a man's decent into rage and chaos and you want to show that he goes from a life where every fight is a challenge, and every enemy has done something to deserve his wrath, to a life where he takes every fight he can get, then by all means, end it in a bar with an old wino. But to fair, in that instance your central character's conflict is internal, and the fight itself is incidental.
-Too many conflicts: Not an overly common mistake, but from time to time it comes up. whether you are overcorrecting after realizing that your stories lack conflict, or if you are writing a 'story of Job' type thing where everything seems to go more and more wrong, keep in mind that misery is about contrast. Taking someone from one misery to another can be pretty intense, but if you give them the illusion of hope, the illusion of progress, if you give them something just so that you can take it away, the experience becomes all the more painful.

Exercises:
-Story diary: One morning, after you get up, identify something that you want or need to accomplish for the day. As you go through the day, stop occasionally and consider what could go wrong at that point of the day that would prevent you from accomplishing your goal. In the evening, write a brief account of your day, but fictionalize it with some of the events you imagined earlier.
-Wouldn't that suck: Pick a story you've written but are not satisfied with. Flip through it and stop at a random point. Read through the page you stopped on and determine what the main character's goals are at that point. Ask yourself what could happen, at that point, to make the main character's life more difficult and prevent them from reaching their goals of the moment.

2. Pacing conflict
a. Peaks and valleys

As with music, stories tend to have a certain rhythm to them. The action rises and falls. The characters struggle and rest. While trying to make every conflict last a specific number of pages can be both problematic and too predictable, creating a kind of rhythm within your writing gives the reader a hint of what is to come that can, if done well, draw them farther into a story, knowing that something bad is coming soon, and leave them guessing what it might be.

Pitfalls:
-Losing sight of the main conflict: While subplots are important and useful things, you should always keep in mind what the central story is, and make certain that every minor conflict must somehow interact with the story as a whole, even if all it does is keep the main character from being where they need to be.
-Convenient, coincidental conflict: There is nothing wrong with coincidental situations, as long as they are used within reason. In real life weird, random crap happens all the time. In stories, however, happenstance should be kept to a minimum. Unless the point of your story is that weird crap happens, or you have a character who is intentionally and specifically prone to oddness. But if your character desperately needs seven hundred fifty seven dollars and ninety two cents, you might want to avoid having him stumble across two muggers who he beats up, only to find that one of them has seven hundred and sixty dollars on his person.

Exercises:
-Make a story map: Yes, it's like an outline, but arrange it so that it's focused on conflict. Start with your major conflict: write down the inciting incident, turning points, black moment and resolution. Then go back, and make sub-stories between the beginning story and the inciting incident, figure out what your central character wants, create an inciting incident and turning point or two, a climax, and a resolution. Do that between each of the turning points. Take that outline and write a short version of your story. If it doesn't flow well, try to determine why. Once you're satisfied with your ability to do this, go another step in, break the story down even further and insert more sub-stories. Rinse and repeat.
-Read like a writer: A reverse of the above, take a story or book you like and write it's outline. Include the inciting incident, the turning points, the resolution. Then look between the key moments in the story and identify the sub-conflicts, break those down. Continue until you feel that you have a complete outline of the story.

b. Multiple conflicts/kinds of conflict
i. Internal conflict

Very, very few stories exist which do not have internal conflict. And most of the ones that don't have it, aren't very intersting.

Advice: Let's keep this simple, all you have to do is take two facets of a character's personality, and show that whatever situation they're in puts those facets at odds with each other. If your protagonist is a citizen with a great deal of respect for law and order, and who loves his fellow man, then forcing him to choose between doing what is legal and doing what might save a stranger's life creates a lot of internal tension.

ii. External conflict

I'm going to assume you can figure this out on your own.

3. What is at risk

This may seem a bit obvious, but I want it written down because sometimes we don't think about it: People don't do things 'just because.' They might think they do, but people usually act in their own self interest in one way or another. You may choose not to tell us why a character is behaving in a particular way (though I wouldn't advise it), but you should always know what motivates your characters.

B: Characters
1. Establish Characters
a. Identify main characters

Pitfalls:
-Too many main characters: A friend of mine occasionally judges stories for various contests, and one of his common complaints, is that many writers introduce too many characters too fast. Especially characters with exotic names that the reader will have an even harder time sorting out. Reading a book is, in some ways, like going to a party: the more people there are, and the more there is going on, the less you're going to be able to follow. Introducing fifteen people to one person in the first ten minutes virtually guarantees that they won't remember any of them.
-Failure to separate central characters from secondary characters: This is a kind of spin off of having too many main characters. In the course of most (not all) stories you're going to have people who come and go, and are important only in their interactions with the main characters. Some, like extras on a set, exist simply to set the mood, while others play an important role in establishing facts or showing us some aspect of the main characters, but that is the limit of their importance. Don't overwhelm your reader with irrelevant facts about people they'll never see again.
-Perfect main characters: A mistake that took me years to correct. Sometimes, as writers, we fall in love with our characters. We create them, and like a parent, we adore them too much. We make them in absolutes, the best, the fastest, the smartest, and then, when we try to write, we find that we've painted ourselves into a corner. The fastest gun in the world doesn't lose. The smartest person alive doesn't get outwitted. Perfect characters are no fun.
-Telling too much/too little: Do you know anybody who told you their life story the first time you met? Do you know anybody who managed to avoid telling you anything about themselves after ten meetings? Approach character building as you would meeting a new friend, let us get to know your characters over time.

Exercises:
-Identify your main characters: Write a one page synopsis (a good habit to get into anyway). Now, write another one page synopsis for the same story, try to make it as different as possible (yes, it's a pain). Now look between the two and find the characters who comeup multiple times in both copies. If a character only needs to be mentioned once in a synopsis, he probably isn't a main character. If one of your synopsis doesn't include him at all, he almost certainly isn't a main character.
-Second generation characters: This is a trick I picked up to deal with my 'too-perfect' main characters. There are people I've made up who are simply too perfect and, frankly, I can't find it in myself to change them. Whenever I try it feels like I'm lying, because, frankly, that isn't who they are. But if they're the best, if they're the very best, then nobody can be better. And if nobody can be better, then maybe I shouldn't be telling the story about them, maybe I should be telling the story of the people they've met. Whether I'm writing about someone who has idolized them from youth, or their protege, or their child, I find it's easier for me to make flawed characters when I go down a generation. Plus, when I'm writing about second generation characters I get to keep the universe I created around their forefathers.

2. Challenge Characters

Pitfalls:
-Problems are too easy: One of my theories about writing, about why books and movies are so popular, is that people want to feel the full range of human emotions. We want to feel joyous, not just happy, we want to feel horrified, not just perturbed. We want to laugh with glee and weep with sorrow. But society is arranged in such a way that it's often hard for us to feel everything. Depending on the details of our lives we might get a little bit more of one emotion or the other than most of the people around us, but nine times out of ten our emotions or muted either because we are protected from the full range, or because we simply don't feel we should be allowed to be that happy/sad/whatever. So give your reader the opportunity to feel everything, as much of everything as you can bring yourself to write. Don't just make things difficult, make them impossible. Let people feel the full measure of grief, so that they can feel the full measure of joy later.
-Problems aren't revealing: Not every problem that faces a character needs to show us something deep and meaningful about their nature. Not every trial needs to wrench their soul or push them to the edge or challenge their perception of the universe. But some should. One of the great things about conflict in a story is that you can show so much through it. You can show us the world you've created, you can show us the trials to come, and you can show us who your character really is, deep down. So show us.

Exercise:
-Jump without looking: If you're having trouble creating enough tension and conflict, sometimes the thing to do is to create the conflict without having an answer. When your character makes a decision, stop, ask yourself what the worst possible outcome is, the thing that they couldn't possibly get out of, and have that happen. Then figure out a way out. I've had times when it took me the better part of a week to find a way that my character could survive. Sometimes I have to go back and change the scene because the only solution I can come up with simply doesn't work in that universe. But sometimes I find myself with the best scene in the book.

3. Potential for Change

I've heard a lot of author's say that if a character doesn't change by the end of the book, the book isn't good. Balderdash. Sometimes people change, sometimes they don't. What you need to do, as an author, is give your characters and opportunity to chcange, a reason to change. A strong reason. Internal conflict is about choice. your main character should face situations which challenge who he/she is. Force them to ask, not simply what they must do, but who they are going to be. If it isn't in their nature to change, so be it, but force them to make that decision.

C: Emotions
1. Peaks and valleys
i. Breaking up emotions

The biggest trick with emotions is realizing that you have to give your reader breaks. You have to give them emotional low points where situations are resolved, or at least are on hiatus. Attempting to maintain a constant tone will wear the reader out. Generally you either want to have a high adrenaline emotion, like fear, or excitement, or anger, and a low adrenaline emotion, like melancholy, or contentment, etc. Then you move between the emotions, or you use humor to break up the tension so that you can rebuild it.

ii. Gradual changes/sudden changes

Shifting the tone of a story suddenly isn't particularly hard, using the old horror movie trick of having a main character hunt after a dangerous noise only to find that it's the comic relief friend is an easy way to keep your reader on their toes. Similarly, throwing a well place joke in can give your reader, and your characters, a break from their troubles. It's important, however, not to ignore the slower emotional buildups. While quick changes are useful tools, it's the long windup that traps readers, making them invest emotionally in your story until you can control their reactions with the flick of the pen.

2. Establishing emotions

I'm a firm believer in giving readers a range of emotions in every story, but there are limits to how far you can go, depending on what you're writing. A comedy may have a few sad moments, but you probably don't want to go killing off your central characters, whereas a drama may call for exactly that. My advice is to pick one to three emotions that fit well together and focus on making your reader experience those as fully as possible.