5. What should you look for before entering a trade?
This is your "don't blow up the account" checklist. Pros run through this before every single trade.
The 5-Point Pre-Trade Checklist:
1. The Setup
Do you have a real reason to trade, not just FOMO?
Look for confluence: 2-3 things agreeing.
Ex: Price at support + Bullish candle + Trend is up = better than just 1 signal
2. Trend & Market Context
- Higher timeframe : Is 1H/4H/1D trending up, down, or sideways? Trade with it
- News/Events : Anything major in the next 30min? CPI, earnings, Fed news can wreck a trade
- Volatility : Is price moving too fast and choppy? Sometimes best trade = no trade
3. Risk vs Reward Math
Set this BEFORE you click buy/sell:
- Stop Loss : Where is your trade idea invalid?
- Take Profit: Where will you take money off?
- R:R: Aim for 1:2 minimum. Risk $100 to potentially make $200. Bad R:R = skip
4. Risk Management
- Position size : Risk only 1-2% of your account per trade
Ex: $1,000 account → max $10-$20 risk per trade
- Daily loss limit: Hit -3% today? Stop trading
5. Your Psychology
- Am I revenge trading after a loss?
- Am I tired, distracted, or emotional?
- Can I walk away if this trade loses?
