What to Check Before Entering a Trade

A seven-point pre-trade checklist: the setup, the level, the stop, the size, the calendar, the conditions and the open book — with what each check prevents and how long the whole thing should take.

A pre-trade checklist is a fixed sequence of checks completed before every entry. Its value is not that any single item is difficult; it is that the items are easy to skip individually and expensive to skip collectively. Seven checks, thirty seconds, and most of the avoidable losses in a retail account never happen.

Key Takeaways

Seven checks: setup, level, stop, size, calendar, conditions, open book.
Each one prevents a specific and common error. None requires judgement in the moment.
If any check fails, there is no trade. That is the point of writing it down.
Recording the checklist result in the journal turns it into data.

1. Does this match a setup in the plan?

Not "does this look good" — does it match a written definition. If the answer requires arguing, it is a no. Prevents: overtrading and trades taken because a screen was open.

2. Is the price at the level, or has the move already happened?

An entry at a level chosen in advance is a trade. An entry 80 pips into a move because it looks certain is FOMO. Prevents: late entries with stops too far away.

3. Where is the stop, and why there?

A chart level or a volatility distance — a reason that comes from the market, not from the amount you want to risk. Prevents: stops placed inside normal noise. See stop-loss orders.

4. What is the position size, calculated from the stop?

Risk ÷ (stop distance × pip value) = lots. Calculated, not estimated. Prevents: the single largest source of account damage. See position sizing.

5. What is on the calendar for both sides, in the next 24–48 hours?

Both currencies of a pair; the US calendar for gold and indices; the earnings date for a share. Prevents: being stopped by a scheduled event you did not know about. See how to use an economic calendar.

6. What are the current conditions?

The spread now versus normal, the session, the instrument's recent range. A 30-pip stop means different things in a quiet week and a volatile one. Prevents: sizing to yesterday's volatility. See volatility and liquidity.

7. What else is open, and does it share a driver with this?

Three short-dollar positions are one position. Prevents: discovering the concentration on the day it moves. See correlated positions.

The Checklist

#	Check	Pass condition
1	Setup	Matches a written definition
2	Level	Price is at a pre-decided level
3	Stop	Placed from the chart or volatility, and inside the plan's normal range
4	Size	Calculated from the stop and the risk amount
5	Calendar	No high-impact event inside the intended holding period, or size adjusted for it
6	Conditions	Spread normal; volatility accounted for in the stop distance
7	Open book	Total risk on this driver within the plan's limit

Any failure is a no-trade. Not a smaller trade, not a wider stop — no trade. The exception is check 5, where reducing size is a legitimate alternative to standing aside, provided it is a decision rather than a reflex.

Worked Example: A Trade That Fails Check 5

EURUSD, valid setup at a level, 25-pip stop, 0.20 lot for $50 risk. Checks 1–4 pass.

Check 5: US CPI is due in three hours.

Option	Consequence
Take it at 0.20 lot	The 25-pip stop is inside the range CPI regularly produces; slippage likely
Take it at 0.05 lot	$12.50 at risk on the stop; survivable through a CPI move
Wait until after the release	Setup may be gone; conditions will be clearer

All three are defensible. Taking it at 0.20 lot without noticing the release is the one that is not, and check 5 is the only thing standing between the two.

(Illustrative.)

Why Thirty Seconds Is Enough

Six of the seven checks are lookups: the plan, the chart, a calculation, a calendar, a spread, an open positions list. Only check 1 involves judgement, and the written setup definition is what constrains it.

The checklist is not a substitute for a risk management plan — it is the plan applied at the moment of the trade. And recording pass or fail against each item is what makes the journal useful: after a month, the item that fails most often is the rule to fix.

Isn't a checklist too rigid for discretionary trading?

The checks are procedural, not directional. Judgement still decides whether the setup is present; the checklist decides whether the trade is allowed to proceed.

What if the setup disappears while I run the checklist?

Then it was a setup that required acting faster than thirty seconds, which is a different approach with different demands. See scalping strategy.

Should the checklist change?

Review it on a schedule, not after a loss. Add an item when the journal shows a recurring error the current checks do not catch.

Do I need this on a demo account?

Especially there. The habit is what transfers to live trading. See demo vs live accounts.

What if I only fail one check?

It is still a fail. A checklist with optional items is a preference list.

Put this into practice

Open an account with MarketsAll and trade spot FX and CFDs on MetaTrader 5, with the spreads and account types set out on our account types page.