Lessons › Why traders lose › The 30-second checklist
World 11 · Why traders lose · lesson 27 · level 2
The 30-second checklist
Before every trade, answer four questions (where is my stop, is my size the one-line rule, is this trade in my plan, am I calm) and skip the trade if any answer is no.
In one line
Think of the trade you regret most. Four questions in the thirty seconds before you clicked could have stopped it.
Explained simply
Before you click, ask four questions. One: where is my stop, the exact price where I give up? If you cannot say it out loud, you are not ready. Two: is my size, how much I trade, set by the one-line rule? Size is the money you accept to lose divided by the gap to your stop. Three: is this trade in the plan I wrote before the day started? Four: am I calm? Rushing, a tight jaw or the need to win it back means no trade. Stand up for five minutes, then ask again.
A worked example
An example: you accept to lose $100, and your stop is $2 away. Size = $100 ÷ $2 = 50 units. If the stop is hit, you lose about $100. Anything above 50 units fails question two.
Mistakes to avoid
- Clicking before you can say your stop price out loud.
- Choosing a size that feels right instead of working it out.
- Taking a new idea that is not in your written plan.
- Skipping the last question because the chart looks urgent.
Check yourself
Your stop is "somewhere near the last low". What does the first question tell you?
You are not ready: the stop must be an exact price. The stop is a number, decided before you click. If you cannot say it out loud, you are not ready to click.
Which of these means "no trade" under question four, am I calm?
A tight jaw. Rushing, a tight jaw or the need to win it back: any one means no trade. Stand up for five minutes, then ask again.
You accept to lose $200, and your stop is $2 away. What size fits the one-line rule?
100 units. Size = $200 ÷ $2 = 100 units. If the stop is hit, you lose about $200.
A new idea pops up that is not in the plan you wrote this morning. What does question three say?
Skip it: if it is not written, it is not a plan. The plan is the one you wrote before the day started, not one you invent now.
Your stop is set, your size fits the rule, and the trade is in your plan. But you are rushing. Is the trade ready?
No: one "no" means no trade yet. All four answers must be yes. Stand up for five minutes, then ask again.
Goal of this lesson: Ask the four checklist questions before your next trade, and skip it if any answer is no.