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Importance of a Trading Checklist

Lesson 3 of 5
Duration 4:15
Level Beginner
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Today, we’re delving into a pivotal tool in the trading arsenal. The trading checklist. The checklist concept isn’t new!

Contributed By: Teach the World to Trade

Study Notes:

Presenter: Sam Baker from ‘Teach the World to Trade’

Origins of the Checklist:

This was inspired by the aviation industry’s adoption of checklists in the 1930s for the Boeing B-17 Flying Fortress to prevent human errors.

Emphasises the checklist’s role in managing complexity and enhancing safety and efficiency.

Critical Components of a Trading Checklist:

Market Direction: Understanding whether the market is trending upwards, downwards, or moving sideways.

Seasonality: Recognizing how different times of the year affect the market.

Current Fundamentals: Evaluating macroeconomic indicators and news events that could impact trades.

Technical Levels: Identifying important price levels that could affect trade decisions.

Success Rate: Reflecting on historical performance to refine trading strategies.

Goal Setting: Defining objectives for individual trades or periods to maintain focus.

Trade Size: Managing risk through appropriate trade sizing according to risk management rules.

Methodology:

Clarifying the specific conditions or signals that trigger trade entries and exits. Takeaway Message: A trading checklist is an essential tool for disciplined trading, drawing inspiration from historical practices in high-stakes environments to ensure thorough preparation and strategic alignment in every trade.

Resources

The History of the Checklist

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Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Teach the World to Trade and is being posted with its permission. The views expressed in this material are solely those of the author and/or Teach the World to Trade and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

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