# Pre-Trade Checklist > A pre-trade checklist stops impulsive trades. Use these twelve checks on setup, risk, costs, news and your own state of mind before you place any order. Source: https://learn.tradelabsai.com/start-here/pre-trade-checklist/ Track: Start Here · Level: Beginner · Updated: 2026-10-03 Publisher: TradeLabs AI (https://tradelabsai.com). Education, not financial advice. Cite as: TradeLabs Learn, "Pre-Trade Checklist", https://learn.tradelabsai.com/start-here/pre-trade-checklist/ A pre-trade checklist is a short list of questions you answer before every order. Pilots use checklists not because they forget how to fly but because skipping one small step under pressure can be costly. Trading is the same. Most bad trades are not caused by a lack of knowledge but by skipping a check you already knew you should make. ## Why a checklist works Markets create urgency. A price is moving, a candle is forming, and it feels like the opportunity will vanish. A checklist forces a pause of thirty seconds to two minutes and turns the decision back into a calm one. It also links each trade directly to your [[building-a-trading-plan|trading plan]], so your journal records trades taken by the plan, not by impulse. ## The checklist Answer every question with a clear yes before placing the order. One no means no trade. ### The setup 1. **Is this one of my defined setups?** Name it. If you cannot, it is not a plan trade. 2. **Does the higher timeframe agree?** For example, a long setup on the hourly chart while the daily trend is up. See [Multi-Timeframe Analysis](https://learn.tradelabsai.com/price-action/multi-timeframe-analysis/). 3. **Is the market liquid enough right now?** Check the [Bid-Ask Spread](https://learn.tradelabsai.com/markets/bid-ask-spread/) and recent [Volume](https://learn.tradelabsai.com/markets/volume/). ### The risk 4. **Do I know exactly where I am wrong?** The stop price is written down before the entry. 5. **Is my position size calculated from that stop?** Risk per trade within your rule, such as 1% of the account. See [Position Sizing](https://learn.tradelabsai.com/risk/position-sizing/). 6. **Is the reward worth the risk?** The distance to a realistic target compared with the distance to the stop meets your minimum [Risk/Reward Ratio](https://learn.tradelabsai.com/risk/risk-reward-ratio/). 7. **Am I within my limits?** Daily loss limit not reached, open risk across all positions within your [Portfolio Heat](https://learn.tradelabsai.com/risk/portfolio-heat/) limit, and not adding a position highly correlated with one already open. ### The calendar and costs 8. **Is there scheduled news before my planned exit?** Earnings, central bank decisions or major data can cause gaps through your stop. See [Trading Economic Releases](https://learn.tradelabsai.com/macro/trading-economic-releases/). 9. **Have I accounted for costs?** Spread, commission and, for overnight holds, financing. ### Me 10. **Am I calm?** Not trading to recover a loss, out of boredom or because of excitement after a win. See [Emotional Control](https://learn.tradelabsai.com/psychology/emotional-control/). 11. **Would I take this trade if I had no position and no recent results?** This catches revenge and overconfidence. 12. **Do I know my exit plan for a profit?** Target, trailing stop or time limit, decided now. **Tip: Write it on the order ticket** Keep the checklist next to your screen or as a template in your journal. Fill the setup name, stop, size and target into the journal before you click buy or sell. If the journal entry cannot be completed, the trade is not ready. ## A filled in example | Check | Answer | |---|---| | Setup | Pullback to rising 20 day moving average | | Higher timeframe | Weekly trend up | | Liquidity | Spread $0.01, average volume 12 million | | Stop | $96.80, below the pullback low | | Size | Risk $150 (1%), entry $99.30, so 60 shares | | Reward | Target $104.30, 2 times the risk | | Limits | Day P&L $0, open risk 1.5%, no correlated position | | News | Earnings in 19 days, after the planned exit | | Costs | $0 commission, spread negligible | | State | Calm, no recent losses | | Profit exit | Target limit order, stop to breakeven at +1R | ## Adapting the checklist Your checklist should match your style. A day trader might add "am I outside the first five minutes of the session?" An options trader might add "is implied volatility rank low enough to buy premium?" A prediction market trader might add "have I read the market's resolution rules and data source?" Keep it short enough that you actually use it; twelve items is near the upper limit. ## Common mistakes - **Running the checklist after the trade.** It only works before the order. - **Accepting "mostly yes."** One clear no is a reason to wait. - **Letting it grow to thirty items.** Long checklists get skipped. Trim anything that never changes your decision. ## Frequently asked questions ### What should be on a trading checklist? Your setup, the higher timeframe trend, liquidity, stop placement, position size, reward to risk, limits, upcoming news, costs and your emotional state. ### Does a checklist make me miss trades? Occasionally, and that is usually fine. The trades it filters out are mostly impulsive ones with poor risk. If valid trades are often missed, shorten the checklist or prepare orders in advance. ### Do I need a checklist for small trades? Yes. Habits are built on small trades, and skipping steps on small ones makes it easier to skip them on large ones. Next, learn how to review each trade after it closes in [Post-Trade Analysis](https://learn.tradelabsai.com/start-here/post-trade-analysis/). ## Continue learning - Next lesson: [Post-Trade Analysis](https://learn.tradelabsai.com/start-here/post-trade-analysis/) - Previous lesson: [Trading Journal](https://learn.tradelabsai.com/start-here/trading-journal/) - Related: [Trading Journal](https://learn.tradelabsai.com/start-here/trading-journal/): A trading journal records every trade so you can find what works and what keeps costing you. Learn what to log, a template and how to review it. - Related: [Building a Trading Plan](https://learn.tradelabsai.com/start-here/building-a-trading-plan/): A trading plan is your written rules for what, when and how much to trade. Learn the parts of a good plan, see a complete example and build your own. - Related: [Position Sizing](https://learn.tradelabsai.com/risk/position-sizing/): Position sizing decides how many shares or contracts to trade so each loss stays small. Learn the formula, worked examples for each market and common mistakes. - Related: [Risk/Reward Ratio](https://learn.tradelabsai.com/risk/risk-reward-ratio/): The risk/reward ratio compares a trade's potential loss with its potential gain. Learn the formula, how it links to win rate, break even maths and common traps. - Related: [Emotional Control](https://learn.tradelabsai.com/psychology/emotional-control/): Emotional control means acting on your plan despite fear, greed or frustration. Learn practical techniques: smaller size, routines, breaks and process goals.