A serious trader must prepare for his or her trading day. You can make better trading decisions. Prevent surprises, and are less likely to miss deals if you know what to expect for the day ahead. The following eight trading checklist will give you a leg up on the competition and help you to approach your trading from a fresh perspective. We’ll also discuss why each point is so important
Why Traders Need a Trading Checklist?
A trading checklist is an important aspect of the trading process since it helps traders stay disciplined, keep on track with their trading plan, and gain confidence. Keeping a trading checklist provides traders with a set of questions they must answer before placing transactions.
A trading plan should not confuse with a trading checklist. The trading plan addresses the larger picture, such as the market you’re trading and the analytical strategy you’ve chosen. The trading checklist concentrates on each individual trade and the requirements that must complete before the trade can be execute
#1 Time-frame analysis at a higher level
Before you begin your trading day, take a quick look at the weekly or daily timeframe. It helps put everything into context; you can get a sense of where you are in the general trend and see if any major barriers or price levels are approaching.
#2 Support and Resistance
Understanding where to expect intra-day support and resistance is just as critical as knowing where to expect important price levels from greater time frames. Even if you don’t employ support and resistance in your trading strategy, it’s a widely used trading concept, with millions of traders keeping an eye on support and resistance levels. It’s crucial to understand where other traders will become interested in the market.
#3 There are highs and lows.
The highs and lows of the preceding week, as well as the previous day’s highs and lows, must be included in your charts. Highs and lows are employed by breakout, range-trading, and reversal traders, and because it is such a widely used idea, you can often witness a good reaction on highs and lows.
#4 Moving averages
Knowing where price stands in reference to the most well-known moving averages is beneficial. When price hits these levels, the financial media will occasionally mention the 50, 100, and 200 moving averages.
Furthermore, understanding whether price swings above or below a moving average can reveal a lot about the current state of the market. Moving averages are one of the most popular trading techniques, according to “market wizard” Marty Schwartz, who utilizes them as a directional filter.
#5 Trend-phase and volatility
Knowing whether you’re trading in a high-volatility or low-volatility market is crucial since it determines how you should place your orders. When volatility is low, you should place orders closer together; when volatility is high, you should place them further apart. Also When it comes to examining individual market volatility, the ATR indicator is a good indicator.
Bollinger Bands, in particular, are an excellent trading tool since they provide a wealth of information. Bollinger Bands that are widening or contracting indicate whether volatility is high or low, and price position relative to the Bollinger Bands indicates the trend phase. If price has been moving outside the Bollinger Bands for some time, the trend is strong, and a brief price burst through the Bands can indicate a reversal is on the way.
Volume reveals a lot about the present state of the market. When looking at current volume and price behaviour, you must ask yourself the following two questions :
Is the price rising as a result of high or low volume? Price and volume increases can indicate accumulation.
Heavy accumulation refers to a volume that exceeds the average (or distribution in the case of a sell-off)
You don’t need to get too caught up in volume analysis; simply knowing whether volume is supporting or opposing current market trend is enough for market preparedness. You may identify high and low volume market settings by using a moving average on your volume.
#7 Today’s headlines
Take a glance at the economic calendar for the day each morning. Prior to the disclosure of important future news, the market usually slows down. It’s frequently a smart idea to avoid trades in pre-news market settings. When activity is minimal during these times, markets can become unstable, and short-term price spikes are prevalent.
The Forex Factory news calendar and Nasdaq’s economic calendar will be the two sources for the day’s news.
#8 Your Five Most Recent Trades
This is one of the most crucial aspects of getting oneself in the appropriate frame of mind before beginning your trading day. Knowing whether you’re on a losing or winning streak can help you avoid risk management blunders; raising risk during losing streaks, being too terrified after a few losses, and becoming reckless and overconfident after a few wins are all frequent trading blunders.
Always take a quick check at your trade log to get a sense of how you’ve done in the past.
The highest performers in most high-performance activities use a checklist. A checklist holds you accountable while also making you more aware of your broader strategy. It also eliminates the guesswork by providing a structure that will assist you in developing a more professional trading habit.
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