What Is a Trading Checklist?
A trading checklist is a list of points to consider and use as a reminder to stick to your trading plan.
If you are trading stocks, Forex, or cryptocurrencies, a checklist makes your risks manageable and more disciplined.
So, don’t forget to prepare a trading checklist or use ours provided in this post.
You don’t have to do everything on this checklist. Just do the best you can, or make a checklist yourself. The more disciplined you become, the more will be your reward.
Something should be crucial to consider adding to your checklist. So, I have collected things that most professional traders agree to stick to them.
Questions in Your Trading Checklist
1. Do You Take Care of Your Health?
Health is one of the most important factors in becoming a winning trader.
Both mental and physical health are crucial. Specifically, mental health can separate you from losing traders.
And you have to take care of both every day.
Related article: Trading Psychology: 8 Tips to Become a Better Trader
Mental Health
Your mental health is about how you think, feel, and behave.
Mental health affects daily living, relationships, physical health, and of course, your trading behavior.
So, take your mental health extremely seriously.
If it is difficult for you to control your emotions, greed, and behavior; it is a must to bring them under your control.
More importantly, if you are not satisfied with your mindset, emotions, and so on, I recommend you visit a therapist or a counselor. Moreover, do things that improve your health which you will read later in this section.
According to Johns Hopkins Medicine, “an estimated 26% of Americans ages 18 and older — about 1 in 4 adults — suffers from a diagnosable mental disorder in a given year.” So, it is very likely for you to be one of them. Do not get shy, visit a doctor if you need it.
What about if you are mentally healthy?
Even if you are healthy, you still need to take care of it.
Here are things that keep you mentally healthy:
- Sleep early. You have to sleep around 10 PM. It is crucial for high-quality sleep and getting up early in the morning.
- Get up early in the morning, take a shower or at least wash your face with cold water, and drink a cup of coffee. According to Dr. Eric Berg DC, one black cup of coffee in the morning is enough. I am not a doctor, but I agree with based on personal experience. Excessive drinking coffee makes me feel very bad and difficult to concentrate.
- Do Meditation. Learn to meditate if do not know. According to Healthline, meditation reduces stress, controls anxiety, promotes emotional health, enhances self-awareness, lengthens emotional span, reduces memory loss, generates kindness, and helps fight addictions.
- Practice yoga. Yoga benefits your body whatever meditation does plus strengthens your physical health.
- Read books. Reading books is the best way to learn something deeply. Watching videos may help you to grasp something but you need books to understand it well. Moreover, reading books is the best way to improve your concentration.
- Limit your social usage. Social media is only beneficial if your usage is under control. If you are wasting hours on TikTok or Instagram, it kills your mental health. Follow only those that matter to you and limit your daily usage. If you need to follow market news, follow those accounts on X (formerly Twitter) that help your analysis. Do not follow a thousand accounts.
Physical Health
Physical health is the state of how well your organs and body systems function and how fit you are.
You are healthy if:
- Your nervous system functions properly;
- Your internal organs (heart, lever, kidney, and so on) function well;
- You have healthy sense systems (vision, hearing, touch, smell, and taste); and
- You have a fit body (you are obese, overweight, or underweight).
Taking care of your health should be on your trading checklist. Because if you are not healthy physically, it will hurt your brain and your decision quality.
The National Institute of Health recommends being active, maintaining muscle mass, maintaining a healthy weight, having a healthy diet, minding your metabolism, and building healthy habits.
For more information, visit the NIH physical wellness toolkit.
2. Are You Trading with Trend?
You can not win trading against the trend even if you are a billionaire.
No one knows when a trend is over or a new trend has started. A trend should reverse and establish a new trend to be valid. Or, it is an established trend.
So, ensure that you are a friend with the trend.
A trend is bullish, bearish, or horizontal. Look for sell patterns if there is a falling trend, and look for buy patterns if it is a rising trend. Do not trade when the market is going in a sideways.
3. Do You Check the Economic Calendar?
An economic calendar is a web tool that compiles macroeconomic data and publishes on time from all major economies.
Traders and investors use it for tracking releases that have the potential to be market-moving events.
For example, the Census Bureau of the USA publishes monthly the Building Permits Survey (BPS) to provide national, state, and local statistics on new privately-owned residential construction. If the data is better than expected, it can move the market.
On Srading.com, we have the best (from our point of view) economic calendar, developed by the Dukascopy Bank for desktop users. And an economic calendar from MQL5.
You can bookmark, and check it daily.
Here is what the desktop version looks like.
And this is what the mobile version looks like.
4. Does Your Analysis Have Confirmations?
Placing a trade based on a single reason is too risky. You need many confirmations.
For example, if you see a bullish triangle on the EURUSD currency pair chart, it is not convincing enough to risk real money. You need confirmations such as:
- Candlestick patterns;
- A bullish trend; and
- Some macroeconomic data are better than forecasted.
The more confirmations that validate your analysis the higher your chance of success.
Remember that trading is playing with probabilities. No one is 100% sure about his analysis. And you should not be too.
5. Have You Calculated Your Risk and Reward?
A professional trader risks only a fraction of his trading account. Understand that trading is not a quick-rich scheme. So, you should risk the amount of money that you can lose.
In other words, you should risk the amount of money, if you lose it, it does blow up your account and does not impact negatively your or your family’s life.
The reward is the prize of your effort and risk. It should be at least twice the size of your risk.
So, if you have calculated your risk to be $2000, then your possible reward should be at least $4000, for example.
Let me give another example from the Forex market. If you risk 50 PIPs, your reward should be at least 100 PIPs.
As a result, if the reward is not convincing, then do not place a trade. For example, if you need to risk 100 PIPs for 100 PIPs of reward, you are likely making a bad economic decision.
6. Do You Know How to Manage Your Open Position?
Managing an open position is closing or changing stop-loss and profit-loss levels.
Your initial take-profit and stop-loss are not necessarily the levels at which you should close your open position. You can use trailing-stop-loss and target a more profitable level.
For example, if you have targeted 100 PIPs of profit in a bullish trend, trading the EURUS currency pair, you can increase your target if:
- There is a new bullish chart pattern;
- Candlesticks are tall and green;
- There is good news about the Euro and bad news about the USD; and
- The uptrend is very strong.
In other words, you can increase your target level, if find new confirmations.
However, you should never add to your position if you are in a losing position. Moreover, you should not increase your risk. Why? Because they increase your risk. If you are adding to your risk, you are trading emotionally. It will cost you a lot. And very likely emotional trading will empty your account.
Download a Free Trading Checklist [PDF]
Here is the summary of what you read.
If you want a higher quality, download the PDF version.
