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

By Steve Burns

After a lifelong fascination with financial markets, Steve began investing in 1993 and trading his accounts in 1995. It was love at first trade. After more than 30 successful years in the markets, Steve now dedicates his time to helping traders improve their psychology and profitability. New Trader U offers an extensive blog resource with more than 4,000 original articles, online courses, and best-selling books covering various topics.