A short checklist makes the assumptions behind a trade explicit. It is most useful when the answers are concrete amounts, order states and account limits rather than a general feeling of confidence.

1. Is the Exit Plan Defined and Supported?

Identify the price or condition that invalidates the setup. Check which order implements that decision and whether it works in the intended session. A stop-market and a stop-limit have different execution risks; neither is a guaranteed loss cap.

Practise the broker's bracket-order sequence. Do not place a standalone exit before the entry if it could open an unintended position. Once the entry executes, verify that the intended protective order is accepted for the correct quantity.

2. Does Size Fit the Dollar Budget?

Divide the planned loss budget by the loss per unit, including the contract multiplier where relevant. Add fees and an execution allowance, round down to the allowed increment and check margin separately.

For example, $100 divided by a $2 stock price-to-stop distance gives 50 shares before costs. That is an illustrative ceiling, not proof the actual loss will stop at $100. An account percentage such as 1% is a chosen convention, not a universal beginner recommendation.

3. Is the Target Based on a Defined Rule?

Record the planned reward and invalidation point. A distant target does not create an edge, and there is no universal 1.5: 1 or 2: 1 minimum that proves a trade is worthwhile. Check the strategy's realised net results rather than substituting a drawn ratio for evidence.

4. Does the Trade Fit Remaining Account Headroom?

Include open positions, working orders, fees and exposure shared across correlated instruments. Compare the proposed trade with both session and total limits. For an evaluation, use the actual programme's rules and phase, not the nominal account label or a generic loss percentage.

If the new trade could cross the remaining budget, the fact that you have not yet hit the limit does not make it admissible.

5. Can You Execute the Plan Deliberately?

Check whether the entry follows the strategy or an urge to recover a loss. If fatigue, distraction or distress prevents a deliberate decision, pause. Also check practical readiness: connection, selected account, contract and a way to contact the broker if order status becomes unclear.

Frequently Asked Questions

How long should the checklist take? Long enough to verify the answers. A fixed 30-second promise is not useful when an order status or contract value needs investigation. Preparation before the session can make routine checks quicker.

What if the setup moves away? Do not skip an unresolved check to chase it. A missed opportunity is different from entering with unknown exposure.

Is a checklist enough to protect the account? It documents a decision process. Actual orders, execution and account controls still need verification, and a compliant trade can lose money. See position sizing and daily loss rules for the underlying calculations.

Risk Disclaimer: Trading involves substantial risk of loss. Past performance is not indicative of future results. See our full risk disclaimer.