Lesson 3 of 11 · 10 min
Your pre-trade checklist
Turn your strategy into a short list of yes/no questions you ask in the same order before every trade, where one No means no trade.
By the end you'll be able to
- Turn the four parts of your strategy into yes/no questions asked in a fixed order
- Run every setup through the checklist and skip any trade that gets a single No
- Write your own 6–10 question checklist and know when to change it
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You know your rules by heart. So how did you end up buying 20 minutes before a major news release, with resistance just above your entry, on your fourth trade after hitting your daily limit?
Why experts use checklists
In 1935 a new bomber crashed on a test flight because a highly experienced crew forgot to release one control lock. The aircraft was not too hard to fly; it had too many steps to remember under pressure. Aviation’s answer was a checklist. Surgery copied the idea much later: when eight hospitals adopted a 19-item surgical checklist, deaths after operations fell from 1.5% to 0.8%.
Neither pilots nor surgeons lacked skill. Skill does not stop lapses when you are rushed, tired or excited. A checklist takes the decision out of the moment: you made it calmly in advance, and now you only read it back.
Trading has the same problem. In front of a moving chart, the urge to click is loudest exactly when your judgement is weakest.
From strategy to questions
Every strategy is four decisions made in advance: setup, trigger, stop and exit. Each one becomes a question on your checklist. Illustrative prices.
A pre-trade checklist is your strategy rewritten as yes/no questions. Step through the chart above: each of the four decisions turns into at least one question, and your trading plan adds the rest.
| Part of the plan | Becomes the question |
|---|---|
| Setup | 1. Does the bigger trend support this direction? 2. Is price at a level I marked before the session? |
| Trigger | 3. Has my trigger candle actually closed? |
| Stop | 4. Is my stop where the idea is proven wrong? |
| Exit | 5. Is there at least 2R of room to the next level? |
| Risk | 6. Does the stop cost no more than my risk per trade? |
| Conditions | 7. Is there no high-impact news in the next 30 minutes? 8. Am I inside my daily loss limit and calm? |
Three rules make it work. Ask the questions in the same order every time. Every answer is Yes or No, never “sort of”. And one No means no trade. Log a skipped trade as a success: the checklist did its job.
Writing your own
Start from your strategy card from What a strategy actually is and Choosing and writing your own strategy, plus the plan you wrote in Writing a trading plan. Then keep it tight:
- 6–10 questions. Fewer and something important is missing. More and you will start skimming.
- Checkable in seconds. “Is the setup good?” is an opinion. “Has the candle closed above the zone?” is a fact.
- Market first, you last. Trend and level, then trigger, stop, room and size, then news and your own state.
Change it once a month, at your review, using evidence from your trading journal. Never mid-session: a question you want to delete during a trade is usually the one doing the most work.
Build your checklist
0 of 8
One morning, three setups
Question 5 is the one most easily waved through. Here is the first setup of the morning, step by step.
Setup 1: a clean pullback that fails one question. There is not enough room to resistance for a 2R target. Illustrative prices.
Try it
Not checked yet
Answer the questions in order, from the top.
0 of 8 checked
1Does the higher-timeframe trend (or range) support this direction?
Why it stops the trade: Trading against the bigger picture means fighting the main flow of orders. Wait for a setup that agrees with it.
2Is price at a level I marked before the session?
Why it stops the trade: A level you only noticed now is usually an impulse. If it was not marked in advance, it is not part of the plan.
3Has my trigger actually closed (not just formed)?
Why it stops the trade: A candle can change completely before it closes. Entering early means trading a signal that may never exist.
4Is my stop where the idea is proven wrong, not where it feels comfortable?
Why it stops the trade: A comfort stop is arbitrary: too tight and noise takes you out, too wide and the loss is bigger than planned. Put it where the idea fails, then size the trade to fit.
5Is there at least 2R of room to the next level?
Why it stops the trade: If the next level sits closer than twice your risk, price is likely to stall there before your target and the trade no longer pays for its losses.
6Is the position sized so the stop costs no more than my risk per trade (e.g. 1%)?
Why it stops the trade: An oversized position turns a normal loss into a damaging one. Recalculate the lot size from the stop distance before you enter.
7Is there no high-impact news on these currencies in the next 30 minutes?
Why it stops the trade: Around big releases spreads widen and price can jump straight past your stop. Let the release pass first.
8Am I inside my daily loss limit and calm (no revenge, no FOMO)?
Why it stops the trade: Trading past your limit or on emotion is how small losses become large ones. Close the platform for the day.
Run this before every trade. One 'No' is enough to skip it.
Run setup 3 first: Yes to all eight and the barrier lifts. Then press Start again and run setup 1: Yes to questions 1–4, No at question 5. Notice how a single No locks every question below it: nothing further down the list can rescue a trade that has already failed.
Quick check
Quick check
Question 1 of 5
Entry 1.2700, stop 1.2670, next resistance 1.2745. Does the trade pass the 2R room question?
Question 2 of 5
Seven questions are Yes. Question 8, "Am I inside my daily loss limit?", is No. What do you do?
Question 3 of 5
Which is a good checklist question?
Question 4 of 5
Mid-session, question 2 keeps stopping trades you like. When should you change it?
Question 5 of 5
$5,000 account, 1% risk, 30-pip stop on GBP/USD ($10 per pip per standard lot). What size passes question 6?
Go deeper: How to Write a Trading Plan (With a Free Template) · Trading Discipline: Why Rules Beat Willpower · FOMO in Trading: Why You Chase and How to Stop