Playbook – Checklist (2024/06)

Introduction

Trading success relies on a combination of strategic planning, psychological readiness, and consistent execution. This article outlines key elements to improve your trading performance, focusing on using checklists, understanding position quality, optimizing sizing, and recognizing market conditions.

The Power of Checklists

Implementing a checklist system can significantly enhance your trading process:

1. Pre-Trade Checklist: Before entering a trade, use a fresh checklist to document trade details.
2. End-of-Day Review: Prioritize a daily review by analyzing each trade recorded on your checklists.
3. Pattern Recognition: Regular use of checklists helps identify patterns leading to good and bad trading decisions.

After a review, make a list of focus points. If you’re over-trading, set a “one trade a day” rule for the week. If you’re taking big losses and small wins, set a rule to only enter 6R+ A+ setups. ONLY enter those. This is how you change your behaviour. One small tweak at a time.

Rating Position Quality

Position quality is better understood as “entry signal count” or signal confluence:

• A++ Trades: These have the highest confluence, potentially with 6 or more aligned signals.
• Signal Importance: High-quality trades often have minimal drawdown and allow for larger position sizing.
• Missed Opportunities: Recognizing high-quality setups is crucial. A recent example showed a near-perfect trade that yielded +0.5% in 20-30 minutes but could have been sized much larger for potentially 5-10%+ gains.

Sizing for Position Quality

Position sizing should reflect the quality of the setup:

1. Psychological Readiness: Essential for correctly sizing high-quality positions.
2. Exponential Betting: Increase size exponentially with position quality.
3. Risk Management: High-quality positions should offer significant account growth potential with tightly controlled risk.

Sizing Guidelines (for a 50k FTMO account on US100):

• B Position: ~0.5 contracts
• A Position: 1-5 contracts, scaling in as the trade develops
• A+ Position: Up to 100 contracts per entry, potentially using up to 100% of margin

Note: Adjust sizing for other markets based on notional value, and something like ATR on the timeframe.

Quantifying and Avoiding Bad Conditions

Recognizing unfavorable market conditions is crucial:

1. Market Indicators:
   • Intraday seasonality
   • Correlation indices
   • Asset movement cohesion
2. Macro Factors:
   • Narrative alignment
   • 0DTE open interest
   • Futures open interest
3. Breadth Analysis: Monitor price movement relative to market breadth for insights into large player activity.

Printable Trading Checklist

You can right click -> save image and then print the image

Conclusion

Consistently using this structured approach can significantly improve your trading performance. Remember, the rarest, highest-quality trades often provide the most substantial returns with the least risk. Focus on identifying these opportunities and sizing them appropriately for optimal results.