The aim of a Forex trading checklist is to prevent impulsive trading and accidental mistakes. An essential checklist for smooth execution of a basic Forex trading entry is presented below. Feel free to build on it and modify it according to your trading style:
Do the charts show anything resembling favorable entry conditions according to your strategy?
You should know the exact entry level.
Some entries can expiry quite soon, some will stay longer. Consult your strategy about that. You should have a very clear idea of the time when you would discard this trade opportunity.
There can be more than one, but all targets should be rather clear. If you do not have the exact price level conditions for profit taking, you ought to write down the exact indicator/time/fundamental conditions that would trigger the exit in the profitable area.
When you do not have exact price levels for your
In any case, it is better to avoid the trades with subpar R/R ratio.
Calculate position size based on your
For example: if your system lets you risk only 1% of your account balance per trade, your account balance is $5,000, and your
Another example: your system lets you risk $100 per trade, and your
You can use a position size calculator to do all such computations, but you must have a position size, which corresponds with your trading strategy, the planned trade, and your current account status.
Position's R/R may seem good, the position size is calculated, but you should also check if your account can tolerate opening this new trade in terms of enough free margin. Usually, the process is quite straightforward.
If you are trading a currency pair where USD is the first currency (base), then the cost of one lot is $100,000. If you are trading currency pairs where USD is the second currency (quote), then the cost should be multiplied by the currency pair's rate (e.g., if EUR/USD is trading at 1.1000, then the cost of one lot is $110,000.) The next step is to apply your leverage — just divide the cost by your leverage. Then multiply the result by your position size, and you have the required margin.
For example, you are trading GBP/USD. The current rate is 1.5000. The cost of one lot is then $150,000. Your leverage is 1:200 and position size is 0.2. The required margin is $150.
There are some exotic cases when margin is calculated differently, but this is beyond the scope of this checklist. You can install the Position Sizer EA for MetaTrader to calculate the required margin of future trades automatically.
It may sound like a
Mistyped pending entry level, a
It is one thing to calculate the optimal position size. The act of similar importance is to make sure that the right value has been entered into your platform's new position form.
Most traders prefer GTC (
Setting maximum tolerable deviation of the actual market order entry price from the planned one can help you to avoid slippage that is too big for your trading strategy.
The right one. Make sure you are not canceling the trade or pressing some special button that doubles the trade's volume or something like that.
Look at the entry price and the resulting volume. Slippage could have affected the former; poor liquidity could have made the volume lower than you have planned for.
If you have developed your own Forex trading checklist, you can share it with other traders on our Forum.
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