Setup checklist
A list of conditions that must line up before entry. Not lined up — no trade.
Setup checklist — what it is?
A setup checklist is a short list of conditions that have to line up for a trade to happen. It exists so the decision is made before the entry, not during it.
The point is not the number of items but how checkable they are. Every item must allow a "yes" or "no" answer with no discussion.
A working version fits into five lines: higher-timeframe direction, liquidity taken, a marked-up zone, confirmation, risk-to-reward ratio.
Setup checklist — how it is built?
You go top to bottom, and the first "no" closes the question. Not "almost fits" and not "but everything else lines up" — there is no trade. That is exactly what protects you from improvising on a live chart.
Setup checklist — common mistakes
Keeping the checklist in your head instead of written down.
Adding items after a losing trade.
Making a list of fifteen conditions: it will stop being met in full.
Checking the checklist after entering.
Related to
Glossary
- short
- selling in expectation of a fall. You sell what you do not own and buy it back cheaper.
- point
- the minimum step of a quote, usually ten times smaller than a pip.
- timeframe
- the period one candle holds: M5 is five minutes, H1 an hour, D1 a day.
- liquidity
- a cluster of pending orders and stops in a particular zone. The fuel for large capital to move.
- risk-to-reward ratio
- the distance to the take divided by the distance to the stop.