Pre-Trade Checklist Topic

[Sledge 13]

All-

Wanted to see if I could spark a discussion devoted to your pre-trade checklist. This sounds absurd, but I have a loosely mental checklist and am trying to put it down onto paper and having a hell of a time getting it into a "decision tree" type format.

 

Since the markets are made to be in such a way that we may have to "roll with the punches" the idea of making some highly rigid list of things seems to be that nothing may ever line up and trades aren't taken at all- or so loose that you are in too early, experience a bad drawdown and get out with a little scrap of profit.

 

Here are the factors that I am trying to put together into some type of useful format:

-Be sure Daily Trend and 4 Hr Trend are in agreement (These are my timeframes I use)

-Where is the market in relation to S/R levels?

- If at a S&R level or close- how is it acting? Does it appear it will bounce or crash through?

-What is the news tomorrow? That may push to or through an S/R level

 

I'm looking to organize my thoughts- but not have a 60 minute per chart checksheet to see if a trade is good or not. Wondered if anyone has overcome this mind-block and been able to get these down for themselves. Seems simple enough to me- but having issues nonetheless.

 

Also be interested in seeing what others do look at- how did they narrow what was relevant and what was fringe data that is a tad less important to making the trade.

 

Thanks,

Sledge

[james_gsx 16]

This is what I do every night.

 

ES - I write down all the important levels on the ES. This means the previous high/low/close and then close by long term support/resistance levels or whatever could come into affect that day. I plot those lines on the chart and wait for possible setups around those areas. Then I check out the daily chart and write down possible scenarios that could play out the next day. I try to keep my mind open so I don't focus on one possibility, I like to be open to various moves - it is after all a game of numbers and probabilities.

 

I then write down all possible trades and what trades I want to make for the next day. I have a notebook where I can write each option play I exercise. I write down my plan for that position including risk/reward and how I might adjust that strategy depending on how the position plays out.

 

For a very basic explanation, let's say I own 10 SPX puts for a longer term position. I check out the daily charts and decide the next day has a higher probability of moving up. Since I know volatility will eat alive my long puts, I will buy calls to hedge against the move. If I didn't already do this at the close, I will do this in the morning if the setup is right. This way I can hedge my position and protect my profits.

 

Let's also say that stock XYZ is forming a bearish descending triangle and I think it can move $10, I want to make a speculative play. I would then write down a possible play for this stock, for example I look over the various options and greeks and decide to buy 10 puts with a strike $10 away from the current price. I would write this down in my plan, then list a few ways I could adjust the strategy if I gain or lose too much too fast. I would then enter this position at the market open.

 

Now let's say I have a position and I think I have captured the whole move, I would simply write down that I want to exit that position at the open.

 

Then I write down a to-do list for the day, and leave the last 3/4 page of my notebook paper open for intraday notes.

 

Overall, I find this to work very well for me. It allows me to be discretionary, but I still follow some rules and I have a firm grasp of what is going on. It's like any sort of fast paced sport. There are many things happening at once, and I constantly adjust. I have found if I don't use a plan like this every night, I tend to get lost and lose my grip and subsequently lose money.

 

hope it helps.

[Sledge 13]

James-

The idea of looking at it from differing "What if" scenarios is an outstanding idea, and one I had not thought of. This may really offer a breakthrough for myself as well as others. If I look back in my memory bank I have looked at a particular instrument and said "Ok I see that this will most likely be moving northward very soon (say within that trading day) but that it will still have to get its supply on the bottom out. So I have made those plays in my head- but to approach it more from a "It could do this" or "don't be surprised if it does that" is a much better approach than getting in and saying "What the hell" when you see that it went opposite your trade.

 

I think that people in general get into a position because of the criteria they have set and to them it looks like the proper position to take- or they wouldn't have taken the position. But a perspective-taking stance of not being so surprised because of multiple scenarios is a very beneficial exercise!

Thank You.

Aaron

[Jaronimo 10]

I do my pre-market filtering in the morning. I look to see what the overnight markets did. I scan through the futures markets to try to get a feel for whats happening.

 

I look at trendlines and relative strength and weakness to get a feel for whats going on. Is it a strong trend or weak trend?

 

What news is coming out today?

 

I look to see the support and resistance levels and how close we are to levels that were defended with high volume.

 

I then figure a basic reward to risk level and also try to set exact numbers where I know if we hit them I am wrong.

 

For the past few months the only markets I trade are the NQ and Euro.

 

I have a large spreadsheet for premarket checks, but I find I do not use it as much anymore. I just want to get a "feel" for whats going on. It seems to me that even with the checklist it only gives a "feel" anyway and does not seem to be more accurate than what I am currently doing.

[Sledge 13]

Jaronimo-

Thanks for your reply, that sounds very on-par with what I am attempting to do. My theory is- if I can make it "elementary" by having to run through this routine say 100 times, then I can also just have it be done "second nature" instead of having to check every single trade off. I'm sort of already there and going at this backwards- but for some reason I want to write it down and have my criteria in black and white.

 

I never wrote down my "edge" because I was still trying to define what my "edge" even was!!

 

Sounds horrible- but If I were to die tomorrow- I'd want something my wife could follow and trade without knowing much about the market (a little over simplified, but I'm sure it makes the point)

 

Aaron

[Jaronimo 10]

I think writing it down is one of the most important steps in clarifying what it is you are actually trying to accomplish. If you are not writing it down, you are probably doing it a little different every time. Writing it down forces you to clarify what you are actually doing. I have had more than a few processes that I thought were brilliant, then upon writing them down I realized I may be an idiot.

 

I would never try to get a system my wife could follow. because she won't. End of story. But I do try to explain what I do to my kids. Just explaining things to people is the same as writing it down, it forces you to be clear about what you are doing. And when they ask questions it forces you to be even clearer.

 

Thats how you know you are on the right track, because you can stand up to the hardest questions and scrutiny and it does not fall apart.

[Sledge 13]

I think writing it down is one of the most important steps in clarifying what it is you are actually trying to accomplish.

[/Quote]

 

Exactly! Took the words right out of my mouth!

 

Just explaining things to people is the same as writing it down, it forces you to be clear about what you are doing. And when they ask questions it forces you to be even clearer.

[/Quote]

 

Yes indeed, that is why I work to try and "give back" someplaces like here on the TL, I am a fairly versed VSA student and attempt to give back as so many people had done for me when I had all my questions (and at times still do)

 

Thats how you know you are on the right track, because you can stand up to the hardest questions and scrutiny and it does not fall apart.

 

My son is only 2 and a half- but hopefully I'll have him as a sounding board once he gets older

Aaron

[GammaJammer 10]

My morning list (no real order, just stuff I normally would prefer to be aware of)....

 

O/N developments - price action, tech levels, fundamentals

Upcoming Data

Order Book (mine and others - where are all the stops likely to be etc)

Market Positioning

Options Expiries (NY cut only realistically, unless there's something ginormous and well publicised for the TKYO cut)

Fixing Rmrs / M+A stuff etc

Other seasonal / struuctural stuff (e.g. specific passive equity related month end fixings, Uridashi issuance / redemtions, MSCI re-weightings that kinda thing)

Rumours / Geopolitics

Desk related stuff (options expiries, whether or not all the toys are working when I sit down, that kinda thing).

Holidays (both current and upcoming in next say 48 hours)

 

I'm sure I've missed a bunch of stuff off here, but thought would throw something brief together to illustrate what the wholesale person would typically look at.

 

GJ

[Guest forsearch]

I agree.

 

Writing it down, LONGHAND, not typing it into a computer, is the key for me.

 

-fs

[arifwise 10]

hi sledge

 

I simply start with self talk blessing the market and tells the market something like, oh my beloved gbp( I trade gbp/usd) please for today guide me and give signal of 100 pips movement precisely. I need the money for myself, my beloved and wonderful wife and for my 3 wonderful boys. Thank you very much for the profit that I am making NOW !

[Guest forsearch]

I simply start with self talk blessing the market and tells the market something like, oh my beloved gbp( I trade gbp/usd) please for today guide me and give signal of 100 pips movement precisely. I need the money for myself, my beloved and wonderful wife and for my 3 wonderful boys. Thank you very much for the profit that I am making NOW !

 

[Sledge 13]

hi sledge

 

I simply start with self talk blessing the market and tells the market something like, oh my beloved gbp( I trade gbp/usd) please for today guide me and give signal of 100 pips movement precisely. I need the money for myself, my beloved and wonderful wife and for my 3 wonderful boys. Thank you very much for the profit that I am making NOW !

 

arifwise:

How long have you been trading the GBP/USD? That is my "bread and butter" pair. I traded it exclusively for about 6 months until I got a little out of my comfort zone and tried a few other things. But this is my day to day trading pair.

[arifwise 10]

hi sledge may you and your beloved being bless always.

 

firstly, please accept my apology for late reply. well actually we jump the gun here. I was thinking of sharing my thoughts and trading experiences disguise as a stupid fx trader. been thinking for a long time to share.

 

now literally Im not trading anymore. its been taken care by my sons. the youngest trader is 14 years old now. he started at 12, drawing manual candle chart since about 9 plus...

 

secondly, Ive to aplogize for my english, comprehension is good but my writing is just okay.

 

been trading daisy(dmk/usd), cally(gbp/usd), sussy(chf/usd) and yennie(usd/jpy) way back then before euro exist.( you notice I give ladies's name purposely to shoot my adrenaline). my opinion and own experience tells me that my brain works very creatively when there is a lady around me. I believe due to release of endorphin(spelling ok ?).

 

Ok lets back to your question. Trading gbp/usd since 1988.

made famous call here and

 

*call the central bank trading desk to sell off GBP/USD at 2.0095/2.0105 at 3:45am local time(gmt 7:45) as heavy as they can in September,1992 of course they do not listen. they were telling me cally(cable) was heading to 2.0500 and the very next day its all in the papers the central bank of malaysia lost rm16 billions !( usd5 billions).

*buy gold at usd283 and target profit at usd900( everyone said I was crazy( have to live with that, Im immune already

*buy crude oil somewhere in 1999 at usd13.48 and target profit usd70 and if broken let it go to usd150(hope I am right again)

 

2 years ago was telling people, bill gates will retire from microsoft coz he s happily trading fx with my colleague's friend being his trading manager(no one believe me as usual, its ok with me).........

[cowpip 10]

been trading daisy(dmk/usd), cally(gbp/usd), sussy(chf/usd) and yennie(usd/jpy) way back then before euro exist....

 

... Ok lets back to your question. Trading gbp/usd since 1988.

made famous call here and .....

 

 

If this is all true, arifwise, then why would you ask such a silly "newbie-ish" question as this in the forex forum? (see this post). With so much trading under your belt, the answer to this question should have been self-evident.

 

hi all .... traders. please someone explain why euro/usd dropped after announcement of rate hike to 4.25% ?

?????

 

Maybe you have just been trading off-and-on (more off?) than full-time? Either way, I find it odd. Very odd.

Edited July 11, 2008 by cowpip

[arifwise 10]

will try to convince my son my second to write and share my market thought so as it will others make good money and dispel negative things about forex trading........hopefully he will free his time and agree helping other traders.

 

action speaks so much louder. it is best I leave my mark here at traders lab well maybe for 20 trading days or 100% profit whichever come first then I stop giving my opinion.

 

mine is so simple. I will tell when to short or long in the market but only for spot fx trading

[arifwise 10]

well actually I do really intend of helping or to put it nicely, sharing my experiences and market view hopefully someone out there will benefit out of it. lately I do find time browsing or surfing the internet and found that there are so many adverts and promotion to trade spot fx and the charges sometime just do not make sense. it can be so low as usd 49.99 and can reach usd15000 !

 

to me simply, if these promoters are so good as claimt, they should publish their trading opinion live and strike a deal - an open deal.

 

Im thinking of, just talking aloud but still far from it(depend on my son agreeing to write), maybe what I will do is offer my trading decisions then if it makes money all those traders that benefit from my trades decision will bank in say anything above 10% nett profit into my bank account. What say you ? of course some will not pay but its okay with me. then if all going okay I will carry on or else I will stop publish my trade decisions. It can be as simple as that.

 

I do believe, there are so many good people and happy traders out there who will show their gratitude and eventually bank in the agreed portion into my bank account.

[arifwise 10]

re: fees charge

 

what quality do we get for usd49.99 lesson ? if you pay peanuts, you will get monkeys !

if too expensive it will keep people away.

 

Life being wonderful and beautiful as always so let make it simple. will share my trade decisions and any profit above 10% nett per month, those benefit from it honestly bank in my portion as you feel worth it distributing it. anything less than 10% nett profit, you keep it. or lets raise it a bit higher say 20% nett profit a month. I dont know im just toying the ideas here so that everybody will be happy and hopefully the happy vibes transmit and transfer and touch many others.

 

LIFE IS SO BEAUTIFUL...........

 

be bless always

[cowpip 10]

action speaks so much louder. it is best I leave my mark here at traders lab well maybe for 20 trading days or 100% profit whichever come first then I stop giving my opinion.

 

mine is so simple. I will tell when to short or long in the market but only for spot fx trading

 

Huh?? Confusious says... "Man with hole in pocket feel cocky all day."

 

You never answered my question, arifwise. Yes, actions speak louder than words, but knowledge trumps it all... which is why I am concerned that you are going to give people advice on when to go long and short in spot forex. I trust that those who pay attention will take adequate protection first. This should be an interesting exercise.

 

At any rate... this latter discussion has nothing to do with pre-trade checklists and should probably be moved elsewhere.

 

To keep things on-topic, here is my daily mantra:

 

- Get up.

- Check the markets.

- Check the fundamentals.

- Mark up the obvious horizontal zones of S/R.

- Check for price confluence with fibs, daily/weekly pivots, etc.

- If price isn't anywhere near a zone of interest, sit tight and wait.

- If price is within a zone of interest, watch price action closely for signs of continuation or reversal and play the market accordingly.

 

Although I recognize that many people benefit from meditation and/or praying to the "currency" or "stock" market Gods, I simply believe that if I take a loss, it's my own fault. And if I take a win, it's also my own fault.

 

I can't blame any God or any failure to meditate properly. It's ALL my fault. I accept it and move on. Meditation to me is a waste of my time (yes, I tried it long ago and it made absolutely no difference to me). Just FOLLOW THE HERD and hop on for the ride when it's least painful. Keep stops relatively tight and located in clear areas where if they're hit, you're obviously on the wrong side of the trade -- and if they're not hit, you're good to go.

 

Keep it simple and adapt.

[cowpip 10]

Im thinking of, just talking aloud but still far from it(depend on my son agreeing to write), maybe what I will do is offer my trading decisions then if it makes money all those traders that benefit from my trades decision will bank in say anything above 10% nett profit into my bank account. What say you ?

 

Oh crap... here we go again! Buddy... you have illustrated absolutely no skill or knowledge concerning forex. Why would anyone pay you for trade decisions? Besides, that sort of activity is strictly forbidden here. Please move this into another thread. It doesn't belong here. Thanks.

[Tess 10]

re: fees charge

 

what quality do we get for usd49.99 lesson ? if you pay peanuts, you will get monkeys !

if too expensive it will keep people away.

 

Life being wonderful and beautiful as always so let make it simple. will share my trade decisions and any profit above 10% nett per month, those benefit from it honestly bank in my portion as you feel worth it distributing it. anything less than 10% nett profit, you keep it. or lets raise it a bit higher say 20% nett profit a month. I dont know im just toying the ideas here so that everybody will be happy and hopefully the happy vibes transmit and transfer and touch many others.

 

LIFE IS SO BEAUTIFUL...........

 

be bless always

 

oh maaan, can't wait to witness the fall-out from this when the forum cops & soothsayers get a hold of it :o

 

you some kind of whack job??

[cowpip 10]

oh maaan, can't wait to witness the fall-out from this when the forum cops & soothsayers get a hold of it :o

 

you some kind of whack job??

 

He's whacked alright, Tess. Holy crap... a rare find indeed. :o

[arifwise 10]

My apology. Please moderator advise me as to where should I post my comments in regars to market view and opinion.

 

Hopefully I do not offend anyone here and if it does please do accept my sincere apology.

 

True trader makes a good decision.

 

Thanks so much in advance.

[arifwise 10]

dear cowpip and tess. may you be bless always

 

kindly read the details of my offer. I never ask to be paid until and unless others benefit from it but even then maybe no one will claim they benefit, isn't ? Thre isno way I can track that.

 

Truthfully I am very okay with that.

 

As for this thread topic. My humble opinion is to work from longer time frame, say monthly chart and work backwards to the shortest time frame that you use for your trade time frame entry. Since you update monthly early of the month, then keep track of it, follow by weekly. Keep it simple always. Build your technical indicators perimeters and never follow the popular perimeter in order to be indifferent.( as the saying goes only 5 to 20% of traders making money - decide to be in the smaller bracket of successful and winning trader)

 

Sledge, may you be bless always and being guided. Take your own route, everyone listening to different drum

[Tess 10]

you’re several steps behind the curve arifwise

 

go get on the phone & see if you can get hold of Nison, Bain & Person’s agent. He’s hustling & schmoozing deals for those slickers all over the w.w.w

bound to get in you in front of a whole truckload of easy $ greenhorns only too willing to slap their dough down onto your tip-sheet table. You’ll be beating them off with a stick.

[cowpip 10]

Arifwise, if your trades are long-term, why would you only say that you will provide advice for 20 days? It can take a VERY LONG TIME for the monthly charts to set up properly (way beyond your 20-day offer).

 

I'm stymied concerning your offer. Why would you even make such an offer in the first place?

 

What gives, buddy???