Strategies · Lesson 19 · Advanced

Checklist and routine: your autopilot against impulses

You build a pre-trade checklist and a fixed daily and weekly routine that mechanically prevent impulse trades.

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Why checklists prevent impulse trades

Pilots are experienced and yet no takeoff happens without a checklist. Not because they cannot do it, but because under stress even pros forget steps. Exactly that happens in a trade: greed and fear switch off calm thinking, and you click what you would never have clicked in calm.

Elder puts it bluntly: to win you do not have to be smarter than others, but better disciplined. A checklist is discipline set in stone. You make the decision once in calm and just tick it off when it counts. That is the autopilot against the impulse.

The pre-trade checklist

You tick off these points before EVERY entry. If even one box is open, there is no trade. It builds directly on the do-not list from the via negativa lesson.

Tick off every point before you open. One open box means no trade.

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The daily routine: before, during, after

Before the session (morning homework): look at the overnight move, determine the market state on the higher timeframe, set the watchlist with valid setups, check open stops. Plus the honest self-test: am I rested and calm enough to trade at all today?

During the session: only take setups from the watchlist, run every entry through the checklist, no position outside the plan. Counting money inside an open trade is a warning sign, then hands off.

After the session: every trade into the journal with a screenshot, result in R and the rule-followed column (yes/no). Do not celebrate or mourn the account balance, judge the process.

The weekly review with the journal

Once a week you go through your journal under /journal. According to Elder the most instructive part is the follow-up look at completed trades, once trend and reversal are clear. Do not step on the same rake twice.

Count three things: how often did you run the checklist cleanly? Which setups ran well, which badly? Where did you trade against your own rule? Mark rule breaks in red, because in the long run they cost you more than any single loss taken by the plan.

If-then rules for the trading day

Decide in advance what happens when it counts, then you do not have to think under stress:

IF I have three losers in a row or am 6 percent down for the month, THEN the trading day or the month is over.

IF an entry does not fully pass the checklist, THEN no trade, no exception.

IF I catch myself counting money in an open trade, THEN I pull the stop up per plan and close the chart.

IF I notice I am chasing a missed move, THEN I wait for the pullback or skip the trade entirely.

Test yourself

You see a live setup that tempts you, but one point of your pre-trade checklist stays open. What do you do?

No trade, an open box means no entry
Go in anyway, one point is not that important
Quickly rephrase the point so that it fits

Why is the weekly review more important than the result of a single trade?

Because across the series it shows how disciplined you follow your process, and that is exactly what is controllable
Because a single trade never means anything
Because the journal increases the account balance

The key points at a glance

A checklist before the entry replaces willpower in the moment of temptation.
The daily routine has three parts: before, during and after the session.
The weekly review with the journal is the most instructive part, not the single trade.
If-then rules for the trading day decide in advance what you do when it counts.

Deep dive

Why do most day traders lose despite solid knowledge?

In Schwager's 'Market Wizards', Richard Dennis said you could publish the trading rules in the newspaper and nobody would follow them. The key is discipline, not secret knowledge.

His Turtle experiment is the proof: 20 of 23 beginners made an average of around 100 percent per year with the same teachable rules. The difference was who stuck to the rules even in bad stretches.

What belongs in a pre-trade checklist?

Elder combines two tools: the 'Trade Apgar' as a quick pre-check and the 'Tradebill' as the actual planning sheet. You decide once, calmly, what counts as a valid trade, and in the moment you only tick boxes.

Trade Apgar: at most 5 questions, filters out half-baked ideas in seconds.
Tradebill: strategy, entry, stop, target, risk amount, position size as fixed numbers.
A single open box means: no trade.
Larry Hite never risks more than 1 percent, which is why every trade is a matter of indifference to him.
That indifference is built, not accidental: it lets you skip trades.

Daily and weekly routine: timing is everything

Elder's most important separation: you set targets and stops BEFORE the trade, and you track your equity AFTER the close. While a trade is open, only management is allowed, no counting of paper profits.

Before the session: overnight move, higher timeframe, watchlist, self-test.
During the session: only setups from the watchlist, every entry through the checklist.
After the session: journal with a screenshot and a column 'Rule followed: yes/no'.
Weekly review: mark rule breaks in red, follow up on closed trades.

1R = your risk unit: the loss you have budgeted per trade (distance from entry to stop-loss). +2R means: you won twice as much as you risked.

Sources: Elder, Alexander: The New Trading for a Living; Schwager, Jack: Market Wizards

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