16 Checklist For Trades

Checklist for initiating and managing trades
A common saying which is often preached in trading material is this: "The entry doesn't matter. The exit is what
matters." This is an extremely misleading idea. Trade management obviously plays a huge role in the bottom line
but picking solid entries and knowing why you are entering at those prices is a big piece of the trading puzzle.
This document provides a sample trading checklist which one should reference before deciding to enter a
trade. All of the points listed are explained in the starter videos so this checklist will make sense once you
understand that material.
1. Context
Take a look at at the big picture. How did the market behave yesterday? How did it behave over the last week?
Is there news today? If so, does it make sense to trade prior to the news or should you wait for the number(s)? If
the news release already happened, how did the market react? Was there a big knee jerk reaction or was it
uneventful? Does the market appear to be holding above or below certain prices very well? Is it in the middle of a
range? In short, is it in 'Grand Prix' mode, 'slow but methodical' mode, 'trap action/suck you in' mode or 'dead'
mode? What are the odds that you are going to get paid if you take a trade? Who needs to hit the next price?
2. Volume
Is the volume good or bad? Is there a continuous flow of transactions at the inside market or is a 1 lot trading
every ten seconds? Does it appear that bids or offers are refreshing and sustaining at certain prices? Are there a
lot of spoof orders? Is half the shown size or more pulling as soon as the market approaches that price? Or is most
of the size being shown actually trading? Does it look like people want to play or does it look like no one needs to
do anything?
3. Levels
Are there any obvious levels near the current price? By obvious, I mean…high of the day, low of the day,
noticeable step in the profile, high or low of the previous day, obvious support or resistance level on a daily chart,
heavy or light volume area from the previous day, etc. Any place that could trigger stops? Any place where you
think you will see what I refer to as the Trifecta:
Major players are pressing in one direction.

New money is entering to try and join the party.
Scared money is running for the exit and puking out.
Nice, fast momentum moves happen when all three of these things take place at the same time because
everyone is going the same way. Try to avoid trades in areas which I refer to as "no man's land". This is explained
in the starter video titled "Understanding cumulative volume profile".
Alternatively, is the market in a tight range of 3 to 5 ticks and showing no signs of moving outside that range?
These are areas where you can play the edge of the range multiple times and possibly scalp 12+ ticks in a 4 tick
range. These types of ranges do not come along that frequently but when they do, it's some of the easiest money a
person can make.
4. Anticipation
Do you have a crystal clear idea of what should take place if you are right and if you are wrong? Do you have
a logical profit target and a logical stop loss? What is your reasoning for each target? If you enter a trade here, how
do you handle it? Is this going to be a stop run, 'as she goes' type trade which should quickly go in your favor and if
it does not, you will scratch it or take a 1 tick loss or 1 tick profit? Is this going to be a play at the edge of a solid
range which will require you to give it 2 to 4 ticks before you cover for a loss? Is it going to be a fade trade based
on heavy absorption and back ticking? What is the most likely outcome based on the big picture?
5. Self-honesty
Are you taking this trade because it's a legitimately good setup which you know how to manage due to your
experience? Or are you taking this trade because you can't stand the thought of finishing the day down money?
Your P&L should have absolutely zero influence on your decision to make or skip a trade.
Summary: All of these factors should be considered when contemplating an entry. The more practice you
have, the more quickly you can run through this checklist and make good decisions. Remember…every time you
click your mouse, it costs you money in exchange fees and commissions. Do not risk the money if you do not have
a good reason to do so.

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Checklist for initiating and managing trades

Major players are pressing in one direction.

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