Bona Fide Trading Checklist to Ace the Market

A trading checklist entails an outline of things that are likely to help you as a forex trader at any time that you intend to take a trade.

A trading checklist is a helpful technique for every trader, especially if you are a beginner in forex trading.

The list helps you to avoid rushed decisions when executing trades.

When your trading decisions are mostly a result of emotions, using a trading checklist will help you control this for the good of your trades.

Every profession benefits from a checklist as it helps to have things in order.

When you are disciplined and are able to fully follow your trading checklist, you make good trading decisions and are sure of organized work.

You also track your work and the results you get hence having the ability to replicate what is working for the foreseeable future.

Below are some of the things to include in your trading checklist.

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Trading Checklist

Emotional and Physical State When Trading

Like any other task, you need to be physically fit, and with the proper mindset so as to trade.

When you lack these, you could very easily conduct an undesired trading analysis and therefore trade wrongly and incur losses, as a result.

Good physical and mental health should be a priority to you as a trader and among the top listed items in your trading checklist.

The moment you are an emotional wreck, it becomes impossible to execute your trades in a rational manner.

The Capital at Risk

Most of the time, traders heavily load their accounts with maximum leveraging in the name of chasing trades that they think they are sure of the direction to be taken.

Traders can avoid this by minimizing the leverage used in every trade. For a beginner trader, I think it is good to even start trading without leverage.

In the event that you are leveraging your account, ensure that you are using a stop loss to mitigate the extent of losses that you are likely to accrue in case a trade went against you.

Ensure that for all the total number of open positions you have at a given time, you do not risk more than 5% of your account balance.

When trading this way, it would take a lot of successive losses to reach an extent that you are blowing your account.

State of the Market

Consider the trend of the market before making any decision is something that should be in your trading checklist.

This helps you to define your trading market and make the decision to either go with it or against it.

In case you are a beginner in forex trading, it is advisable to go on and trade with the existing market trend as this increases the possibility of you generating profit.

It is also good because you will not be required to have a specific trade opening price.

Higher Timeframe Analysis

Apart from your trading timeframe, you should also be checking at the higher timeframe for that currency pair in question.

This gives you a very clear understanding of where you could generally position yourself based on the overall trend.

You also have an overview of the areas of value; that are likely to come about.

I tend to call them “landmines” since these are the areas where the market is likely to reverse. It is important to note these areas to ascertain where to set the take profit target.

In short, you should be using the higher time frame so as to identify the direction of the trend and the trading timeframe for entries.

As I was beginning my career, this is one thing in my trading checklist that helped boost my winning rate.

When you are trading with the trend, the probability of winning is always high.

Ensure to Trade from an Area of Value

This is something you should not miss in your trading checklist.

As a trader, you must have heard the saying ‘buy low and sell high’.

When purchasing groceries, you have an idea in mind of how much you intend to spend.

Depending on past buying experiences, any prices above your set target will make you not buy the groceries.

With trading, however, how are you able to identify an area with value, what is high and what is low as a trader?

Support and resistance levels can be of great help here.

Support – An area with value for a trader as it offers buying pressure to push price up.

Resistance – An area with downward trend value, due to the selling pressure to push the price lower.

At no given time should you try to buy when the market is approaching a resistance level, and neither should you try to sell when the market is approaching a support level.

Volatility and Trend-Phase

It helps you if you are able to know whether you are in a low or high volatility market environment since you get an idea of how to place your order.

In case there is high volatility, you need to give your stops a substantial breathing space so that you are not easily stopped out.

To analyze specific market volatility, a good indicator to use can be the ATR indicator.

What is the risk/reward ratio?

This signifies the prospective reward a trader could earn for each dollar he/she risks on a trade.

It is usually measured in terms of pips.

Traders with a positive risk to reward ratio have a higher probability of making profit, compared to those with a negative risk to reward ratio.

A good example is to compare two people, one with a risk to reward ratio of 1:1 and another one with an RRR of 1:2.

In case the first trader was to lose 50 trades out of 100, he will break even and not make any profit or loss.

In case the second trader also lost 50 trades out of a 100, he will end with a positive profit. This is because for every pip that he/she risks, he/she stands to gain 2 pips.

As a result, this is something that should be in your trading checklist.

News for the Day

Every morning, go through the day’s economic calendar.

Crucial upcoming updates tend to slow the market down more than the main news brief.

When you are up to date, you are able to avoid trades in markets that are highlighted before the main news, which is a good thing.

If the trade volume is low in such times, markets normally become hard to predict, with short-term high prices.

There are two main sources that I normally use for such information. They include the Nasdaq’s economic calendar and ForexFactory news calendar.

Your Entry Trigger

There are three basic facts of trading.

  • Your trading frequency depends on your entry.
  • The amount you risk in the trade depends on positions sizing.
  • Losing or winning in the trade depends on your exit

Given that your entries only determine the frequency of your trades, you should not spend most of your time on it.

In trading, there are far more important things to consider, other than this basic fact. Things like trade location, market trend, and risk management, among others.

You can use a breakout or pullback as an entry trigger for an inherent trade.

pullback is when price temporarily goes against the basic market trend. When the market trend is in an uptrend, a pullback tends to move lower.


breakout, on the other hand, is when the price goes outside of a defined market boundary. This boundary can be explained with the use of support and resistance levels.

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But I normally encourage my students to wait for a pullback after the breakout. This helps to reduce the probability of being stopped out.

Following a Trading Plan

All content discussed in this article about the trading checklist is important, but then, without it tying in with your trading plan, it loses the importance.

Not sticking to a trading plan brings about mixed results. It becomes even difficult to do your post-analysis since you are not sure about what to look for.

Always stick to the trading plan and avoid placing trades until the trading checklist has been completed, and it affirms that a trade is viable based on your trading strategy.

A trading checklist gives you the clarity to stop you from guessing and also gives you a framework that would enable you to launch a better trading routine.

Profitable traders tend to operate with a checklist, and that is why they have sustainable results for long periods.

They duplicate what is working over and over hence end up with sustainable profits in the long-run.

Read: Trading Tricks: 14 Practical Trading Tips to Dominate the Market

As a result, ensure to use a trading checklist at all times to help improve your trading prospects.

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