Do THIS before every trade – 14 step trade checklist – New Trader U

This is a guest post by Cory Mitchell, CMT of tradethatswing.com.

Creating a Checklist for Trading

A checklist for trades helps us follow the strategies outlined in our Trading Plan.

Don’t trade without it. Running through a checklist may only take one second for some traders, or a minute or two for others.

A trading checklist is a written document (may need to be memorized) covering the elements that must be present or not present to take a trade. Checklists, when abided by, reduce mistakes, improve performance, and keep us out of trouble.

Checklists vary based on strategy and time frame. 

  • A day trader’s checklist may be done mentally in rapid market conditions. It may only contain a few points and take a second or two to go through.
  • A swing trader or investor may have time for a more thorough checklist, maybe even physically putting checkmarks on a page for each criterion their trade idea passes.

Here are some things to include in a checklist. Pick or add ones important to your strategy.

  • Are market conditions (volatility, trend) right for this trade?
  • Are there major news events that may occur during the trade? (Economic or earnings)
  • Correct entry point based on your strategy?
  • Is the stop loss reasonable for the potential reward? (risk/reward)
  • How am I getting out of this trade? (Not a checkmark question, describe)
  • Is my position size correct? 
  • Am I violating any of my Trading Plan rules?

Here are some additional checklist items.

May not apply to everyone. Only use if these issues are causing you problems in your trading.

  • Am I allowed to trade? (Not on a forced break due to recent losses)
  • Am I placing this order in the correct hours/my established trading time?
  • Is it within my max number of positions I can hold at one time?
  • Is it within my leverage tolerance?
  • Did I find this trade through the proper means? (Not a “tip” but from my own research)
  • What should I remember during the trade? (Key point you’ve struggled with recently)
  • Am I in the right mind frame for this trade? (Not revenge trading, angry, over-confident)

It’s a big list, but some points may already be answered. A swing trader should know market conditions before they even consider a trade. Checking news is done in the Pre-Trade Routine. We know our entry and exit rules, we’re just confirming them. 

You can follow Cory on Twitter at @corymitc and check out his website at tradethatswing.com.

More information available through this link: Creating a Pre-Trade Checklist for Swing Trading or Day Trading

Do THIS before every trade - 14 step trade checklist
Image created by Holly Burns

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