Trade FOREX with FXCM

  • Award-Winning Platform
  • 24/7 Customer Support
  • Trade Directly on Charts
  • Free $50K Practice Account

Resources

DailyFX Home / DailyFX For Beginners / Trading Tips / Weekly Trading Lesson

One Minute Pre-Trade Checklist Any Trader Can Use

By , Forex Trading Instructor
28 August 2013 03:00 GMT

Article Summary: A Trading Checklist is a subpart of your trading plan or a condensed trading plan that you can reference when you’re on the edge of your seat about to jump in the market.

In the market - time is not money - time is time and money is money.Often money that is just sitting can later be moved into the right situation at the right time and make a vast fortune – patience – patience.

-Jesse Livermore, famous trader of the early 20th Century

Building a trading plan is a key part of every trader’s success. Whether you are an individual trading your risk capital or you are the head trader at a major institution, you likely have some type of indicator that alerts you to a trade potential. However, you will have a hard time being consistent if you don’t have a trading plan and an accessible trading checklist to refer to before entering every trade.

If you don’t feel like you have the tools to trade like a professional, we’ve created a FREE certificate course here to help you understand the key concepts we believe a professional trader should know.

Forex_Traders_Checklist_body_Picture_3.png, One Minute Pre-Trade Checklist Any Trader Can Use

Trading Plan vs. Trading Checklist

Both are equally important. A trading plan encompasses which markets you will trade, how much capital you will trade with, what chart set ups you will devote your time to, how you will manage your risk and what underlying fundamentals should be present for you to put your money at risk in order to chase a profitable opportunity. In other words, a trading plan will describe the “edge” you have that allows you to comfortable trade your market.

Sadly, many amateur traders do not have a trading plan and so they’re chasing anything that is talked about on TV or that they hear someone else say they’re trading. If you don’t have a trading plan yet, then chances are you have trading regrets such as seeing a profit turn into a big loss or taking on too big of a trade size for your capital base. The good news is that with a few steps, you can turn those regrets into an effective strategy.

Developing Your Checklist

Here are the basic components that your checklist should cover. Most of these questions can be answered in a quick yes / no fashion so it should only take you a few seconds for each. After you go through the 5-8 questions, you should be on your way to making a higher probability trades.

Learn Forex: You Can Apply Your Checklist to the Chart You’re Looking to Trade

Forex_Traders_Checklist_body_Picture_2.png, One Minute Pre-Trade Checklist Any Trader Can Use

Presented by FXCM’s Marketscope Charts

Here are some questions you can use to make up your checklist that correspond to the chart above:

Is the market trending or ranging?

Are the bulls or bears currently in control?

Are the indicators that I use confirming my trade?

Is there a significant level of support or resistance nearby?

Are there any significant new releases coming up that could impact the trade?

Where should the market not go if my edge is correct or where should i get out of the trade?

Am I utilizing no more than 5x leverage on my account?

Should I enter this trade based on the prior answers?

There is no need to worry about being a perfect trader who will never take a loss because it won’t happen. However, you can focus on taking trades that align with the set ups that you feel deserve your time and capital. A trading checklist like the one above is a tool you can use to make sure that you’re on the path to consistence trading.

Happy Trading!

-Written by Tyler Yell, Trading Instructor

To contact Tyler, email tyell@fxcm.com.

To be added to Tyler’s e-mail distribution list, please click here.

As a dedicated FX Trader, would you like the following?

  • Faster access to fundamental releases that is likely to move the markets
  • Feedback on market movements in real time
  • Real time Speculative Sentiment Index Readings

Our Real Time Analyst on Demand is a fee based service that gives you access to our professional trading staff from 6am – 2pm ET Every trading day so you can get feedback on your trade setups and ideas.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.

28 August 2013 03:00 GMT