TRADER TO BE CHECKLIST

1 Understand why you want to trade.

What do you want out of life?

How does trading fit into this life plan?

What are your beliefs about the markets?

What are your beliefs about your ability to trade the markets?

2 Are you up to the task of becoming a trader?

What personal strengths will you bring to your trading?

What personal weaknesses will impact your efforts?

What is your attitude to risk?

How motivated are you to achieve success?

What are the consequences of failure, and are you prepared to face this possibility?

3 Do you wish to trade part-time or full-time?

Why ?

If full-time, how do you plan to make the transition from working for a living to trading for a living?

When will you quit work?

Will you phase it out?

How will you support yourself or your family during this period?

What is your fall back plan?

4 What timeframe do you wish to trade?

How much time do you have to devote to trading?

 Would you prefer daytrading, swing trading or position trading?

5 What are your goals from trading?

What return on investment are you seeking?

Daily, weekly, monthly or annual?

Why?

Consider whether that return is realistic?

Are you trading for cashflow or capital growth?

How long are you expecting it to take for you to learn to trade and achieve this result?

6 Review your financial situation.

What initial capital will you have available to commence your trading?

How much can you afford to spend on trading education?

How much are you willing to lose during the ‘learning’ period?

7 Review your current time schedule.

How much time can you commit to learning to trade?

Produce a weekly planner to ensure that time is always available.

8 Seek advice from a licensed financial adviser.

Discuss your desire to trade, and how it can best be safely incorporated into your wider portfolio and
wealth management strategy.

9 It’s time for a reality check.

Accept that approximately 95% of traders fail in their ability to consistently profit from the markets.
Research the cause of trader failure.
For 95 % it is a hobby where they try to get rich quickly without any plan, change systems daily,
have no idea where they are, where they want to go, and have not thought of how they want to
get there. Doomed to fail!!
The secret to success as a trader; is:
1. BUSINESS PLAN (FX trading is a business and the you are the CEO of ME INC.)
2. TRADING PLAN (plan the trade & trade the plan)
3. TRADING METHOD (very low risk method to enter the markets...)
4. DISCIPLINE (only take 100 % ironclad trades, with 100 % quality execution)
5. PATIENCE (be a trapper not a hunter = let the trade come to you)
 6. FOCUS ( no distractions; this is a business; your future)
7. CONFIDENCE (in yourself and your trading method)

Why do you believe that you can be a part of the 5% consistently profitable traders?
I have my business plan, trading plan & trading method, trading rules, checklists set up. I treat
this as my business: Me Inc. I will set up my administration and incorporate in order to comply
with all tax laws and regulations. I treat it as a business and am being extremely professional
about it.

Accept that trading success will most likely take longer than you anticipate, and cost more than you
expect. How will that impact your plans?

Do you have realistic expectations with respect to the time and effort required to learn to trade, and the
returns that are possible from trading?

10 Confirm you have the full support of your family.

Discuss any concerns you may have, and your plans to minimize any negative impact.

Discuss any concerns they may have about the impact on relationships, or your financial future.

11 Trading Psychology.
Understand that you need to take personal responsibility for your trading decisions, and ultimately for
your trading success or failure.

Understand that the nature of the markets is uncertainty.

Understand the probabilistic nature of the trading.

12 What market do you wish to trade? Stocks, options, forex, futures, CFDs?

Research the above choices and choose the market that you feel most comfortable with.
Understand why you want to trade this market.

13 Study your chosen market.

Understand the fundamental drivers of that market.
Is there sufficient liquidity in the market to allow ease of entry and exit? If not, consider selecting another
market.

Is there sufficient volatility in the market in order to achieve your profit objectives within your chosen
trading timeframe? If not, consider selecting another market or timeframe.

Define a broad strategic concept that could be applied to this market to produce profits, such as:
Capturing trends. Capturing momentum swings. Support or resistance. Reversal from extremes.
 Gap plays. Volatility or time decay option strategies.

What capital is required for trading your chosen market & timeframe?

What margin do you require?

What is the minimum position size?

If you cannot afford this market, then either: Continue studying while saving more capital, or consider
finding another more suitable market or timeframe that suits your available capital.

Understand the benefits and dangers of the leverage available in this market.

14 Study price movement.

Understand the movement of price from the perspective of supply and demand imbalances.

15 What is your preferred analysis style?

Technical Analysis?
Fundamental Analysis?
Statistical Analysis?
A combination of the above methods?
Research all of the above methods and find the style that you most relate to.
.

16 Study your chosen analysis style.

Become familiar with all analysis tools and choose those that you most relate to.
For example, with technical analysis:
Do you prefer bar, candlestick or point & figure charts? Will you use tools such as Level II, market
profile or time of sales? Do you prefer price action analysis or indicator based analysis?

17 Consider the need for personal coaching or mentoring.

Do you prefer live trading rooms?

Do you prefer after-market coaching?

Do you prefer one-on-one coaching?

Do you prefer a group or seminar setting?

Do you prefer self-coaching?

18 Risk Management.
What is the maximum risk that you will allow per trade?

What is the maximum portfolio heat that you will allow?

19 Money Management.
How will you determine position sizing?
Fixed ratio money-management
 When will you increase or decrease position size?

What are your plans for profit reinvestment?

What are your plans for drawing capital?

20 Rewards Program.
All work and no play isn’t fun, so please implement a rewards program.
How and when will you reward yourself for progress towards becoming a trader?
How and when will you reward yourself for profitability (*not from trading money)?

21 Trading Psychology.
Understand the qualities of a successful trader.
Determine strategies to maximize these qualities within yourself.
Understand the qualities of a losing trader
Determine strategies to limit the impact of these qualities within yourself.
Keep improving every day:
The secret to success as a trader; is:
1. BUSINESS PLAN (FX trading is a business and the you are the CEO of ME INC.)
2. TRADING PLAN (plan the trade & trade the plan)
3. TRADING METHOD (very low risk method to enter the markets...)
4. DISCIPLINE (only take 100 % ironclad trades, with 100 % quality execution)
5. PATIENCE (be a trapper not a hunter = let the trade come to you)
6. FOCUS ( no distractions; this is a business; your future)
7. CONFIDENCE (in yourself and your trading method)

22 Study basic business skills, such as:

Time Management:

Goal Setting

Record Keeping:

Bookkeeping:

23 Business Management - Business Setup and Planning:

Seek advice regarding appropriate strategies for: Business structure. Asset protection. Tax
minimization.

Business Management – Process:

Documented trading plan – use this checklist as a guide for documenting your trading plan.
Trading plan – ok
Trading method – ok
Trading checklist – ok
Trading log / journal – ok
Trading rules – ok

Documented procedural steps to ensure consistent application of your trading plan.

Documented routine: Pre-market routine. During trading. Post-market routine
Pre-market routine: Preparation checklist - ok
 Mantra of discipline - ok
During trading: updating trade log / journal – ok
Post-market routine: read trade log / journal; analyze trades; check bank holidays tomorrow - ok

24 Documented record keeping and performance tracking process:

Trading Journals, equity curves and Profit & Loss statements. Recording of personal trading
performance and psychology. Will you use a spreadsheet, paper, or portfolio management software?
.

Documented review process:

Daily, weekly, monthly, quarterly, or annual reviews.
Daily, weekly, monthly, quarterly and annual comparisons, updated daily

Performance based review upon exceeding daily, weekly or monthly drawdown.

25 Business Management – Personnel:

Consider the need for the following support personnel: Broker. Adviser. Coach / Mentor. Trading
Partner. Accountability Partner. Accountant / Bookkeeper.
Will they be employed or outsourced?

26 Business Management – Resources:

Ensure appropriate office space for trading
Home office or dedicated trading office? Desk. Comfortable chair. Suitable lighting. Minimal
distractions.

Ensure appropriate hardware for implementation of your trading plan:

Computer system. Internet Service Provider. Telephone system.

Ensure appropriate software for implementation of your trading plan:

Charting application. Data provider. Scanning software. Research tools. Testing software. Trading
journals (may be soft copy or hard copy).

Portfolio Management. Record Keeping / Bookkeeping.

27 Business Management - Contingency Planning:

Develop contingency plans for hardware failure.
What if:
 electricity failure:
 laptop/pc breakdown:
 Internet failure:

Of particular importance is your ability to contact your broker and exit all positions if you lose access to
your charting and order entry applications.
 phone list with all numbers of brokers
 have SL, TP & TS in place as soon as order has been placed
 always updated tradelog to exit trade by phone if needed

Develop contingency plans for additional income streams, if required.

Halt trading criteria:

During a trading session.
 Drawdown limits – daily, weekly or total.
.

28 Personal Management:
What is your plan to ensure maintenance or improvement of health?

Establish plans for:

Physical health. Get in shape
Fatigue management. Get enough sleep (7 – 8 hours / day)
Time away from the markets. - have a life besides trading

What is your plan to ensure a healthy mindset?

Trade according to preparation checklist, trade checklist, fitness, healthy eating, getting enough
sleep and have a life besides trading.

Establish plans for: Relaxation Visualization / Affirmations.

29 Learn how to use all your trading hardware and software resources.
In particular, be familiar with all order types available. Understand the advantages and disadvantages of
each, and when to use each type of entry or exit order.

30 Do you prefer systems that are:

Discretionary?; Rule based? Why?

31 Define your trading strategy.

Will you develop your own, or purchase a system?

Understand why the chosen strategy works

Does this strategy fit your beliefs for how and why the market moves?

Does this strategy suit any time constraints you may have?

Asset allocation – what percentage of your total capital will be applied to this strategy and/or market?

Can this strategy provide the rewards you are seeking?

Does this strategy provide a maximum drawdown that is within your financial and psychological limits?

Document clear rules for: Position sizing. Risk control. Trade setup. Trade entry. Trade
management. Trade exit.

32 Ensure your strategy has a proven edge.

Conduct back testing to ensure profitability, either by hand if your system is discretionary based, or with
appropriate testing software if you system is rule based.
Conduct forward testing to ensure profitability, using a demo or simulation platform if available, otherwise
via paper-trading.
Ensure any testing was conducted exactly in accordance with your trading plan, and over sufficient
sample size to ensure valid results.

33 Are you ready for live trading?

Review the above steps and confirm all actions have been carried out.
Is your trading plan documented?
Is your trading routine and process documented?
 Why do you believe you are ready?
What is your edge in the market?

34 Commence trading with the smallest possible position size.

Your goal is to consistently execute quality trades in accordance with your plan, not to make money.
Remember, success comes from the disciplined and consistent application of a positive expectance
trading strategy, with proper application of risk management, money management, business
management, personal development and trading psychology.
Success comes from continued exposure to the markets and developing an intuitive feel for market
sentiment.
Success comes from unlearning the fear based decision making processes that were developed through
your pre-trading life. As you continue to act in accordance with your trading plan, and eventually realize
that the market cannot hurt you, your confidence will naturally build. You will learn to react to your
system instinctively, without fear.

35 Ensure ongoing performance tracking and review.

Document all trades in your trading journal.
Document your personal performance in your trading journal.
Conduct regular reviews of your strategy and yourself, to identify areas of strength and weakness.

36 Achieve consistency in implementing your trading plan

Ensuring you NEVER allow your risk to exceed pre-planned limits.

37 Achieve break-even consistency.

Reward yourself – break-even is an excellent result.

38 Increase position size gradually.

Prove consistent success at each level, in application of the trading plan and profitability, before any
further increase in position size.
Gradually increase up to the maximum risk allowable for your capital base.

39 Continue trading:
Your goal continues to be executing quality trades in accordance with your plan, not to make money. Do
this and the money will follow.
Continue with your ongoing performance tracking and review process. Never stop learning.
Commit to ongoing education and constant improvement.

40 Well done – you’re a trader!