Pre-trade checklist in gold trading

A pre-trade checklist is a list of conditions that must all be true before a trade is placed. It is the practical, minute-by-minute form of a trading plan: a few questions answered in seconds that stop the most common errors.

How it applies to gold trading

A useful gold checklist covers four things. Context: is the higher-timeframe bias clear, and is price at a level that matters? Calendar: is there high-impact US data, a Fed speaker or an FOMC decision in the next 30 minutes, and is it near the daily rollover? Setup: does the entry meet every rule of the setup, not most of them? Risk: is the stop placed at a logical level, the size calculated from the stop and the risk within the daily limit?

The value comes from answering honestly. A trade that fails one item is skipped, which is often the most profitable decision of the day.

Worked example

Example (hypothetical numbers): at 8:20 a.m. New York time a long setup appears at 4,010. Checklist: higher-timeframe bias bullish (yes); at a level (yes, previous day high retest); news in 30 minutes (yes, CPI at 8:30), so the item fails. The trader waits. CPI spikes gold to 3,992 and back to 4,015; the planned $6 stop at 4,004 would have been hit.

A common mistake

Making the checklist so long that it is skipped. Six to ten items is usually enough.

See also: Trading plan, Economic calendar, Multi-timeframe analysis, Risk per trade.

Frequently asked questions