Having an ultimate forex trading checklist is an essential element of the trading process since it helps traders stay disciplined, adhere to their trading plan, and boost their confidence.
Before making any transactions, it is important for traders to keep a list of questions that they must answer before they can forward the transaction.
Contrary to popular belief, a trading strategy is distinct from a trading checklist. An important part of any trading strategy is the overall picture, which includes things like what market you’ll be trading on and what analytical approach you’ll take.
10 Best Forex Brokers in South Africa for 2025
Rank
Broker
Review
Regulators
Min Deposit
Official Site
Pre-Trade Checklist
Before you enter a trade, there are some crucial questions that you should ask yourself first. The most important questions to check off your list are described below.
Check if the market is ranging or trending
Experienced traders understand that identifying a strong trend and trading in the direction of the trend has the potential to result in higher probability deals in the future.
The adage that trending markets have the potential to bail traders out of disastrous trades is well-known in the financial community.
If a trader decides to start a short position after a trend has become firmly established the trend will continue to deliver more pips to the downside than to the upside, regardless of when the trade was entered.
Before entering a trader, traders should consider whether the market is exhibiting symptoms of a strong trend and whether ‘trend trading’ is a component of their trading strategy.
The current market condition should be taken into consideration while you plan up your own trading checklist. It is necessary for you to define your market and decide whether you will align yourself with or against the market.
The current market trend is usually recommended when trading for beginners who are just getting started in the market. This will increase your chances of making a profit, and another advantage is that you will not be required to have a specific opening price in order to profit.
Check support and resistance levels
For a variety of reasons, the price action tends to adhere to certain price levels, and being able to recognize these levels is essential for successful trading.
Traders do not want to be in the situation of maintaining a short position after the price has plummeted below a critical level of support, only for the price to bounce back up.
A similar pattern can be observed when the price approaches a key level of resistance and then falls back down shortly after. Trend traders generally look for persistent breaks of these levels as an indication that the market may be about to trend in a particular direction.
Range traders, on the other hand, will wait for prices to bounce between support and resistance over extended periods of time in order to profit.
Use indicators to check your position
Indicators assist traders in confirming transactions that have a high possibility of success. Based on their trading plan and approach, traders will have one or two indicators that will help them to execute their trading method more effectively.
Make sure you don’t fall into the trap of over-complicating the analysis by including many indicators on a single bar chart. Continue to keep the analysis clear and straightforward so that it is easy to read at a glance.
Check the risk-reward ratio of your position
This is a measure of the estimated profit you can expect to make on each dollar you invest in trade security. When your risk-reward ratio has been determined, you will be able to determine whether or not you should place a stop-loss order in your trade.
An automated order to close a deal whenever the market falls below a given price is defined as follows: Its primary goal is to keep you from incurring more significant losses.
Check the risk to your capital
Your personal trading checklist should encourage you to pay close attention to the amount of money you are investing. Keeping this in mind will assist you in maintaining your focus on the prize by reminding you of the amount of money you expect to make from the trade.
Before you begin trading, you will also want to double-check that the trade amount is correct. This is a critical issue for traders to ask themselves. When pursuing what they believe is a guaranteed win, traders frequently blow up their accounts by leveraging their accounts to the utmost extent possible.
Another option is to keep the leverage utilized on all trades to a maximum of ten to one or fewer on a consistent basis. Another useful piece of advice is to set stop losses on all trades and to ensure that the total amount at risk does not exceed 5 percent of the account balance.
Check all recent economic news reports
It is essential that you have a credible source that will provide you with up-to-date news and information on what is occurring in the trading sector. Taking such news and announcements into consideration may cause you to reconsider your decision and save you from incurring certain losses.
The possibility of unexpected market news invalidating the “perfect” trade is always a possibility.
While it is nearly impossible to predict events such as acts of terrorism, natural catastrophes, or systemic failures in the financial markets, traders can plan for economic releases such as the NFP, CPI, PMI, and GDP releases, which are available on a regular basis.
Check that you are in the right emotional state
You must be in good physical form and have the correct mindset in order to trade successfully. A failure to comply with this will likely result in an incorrect market analysis, which will be followed by the execution of lost trade.
The only thing that can happen in such a situation is that you will suffer significant losses.
Trading checklist
While you are in the middle of a trading position, there are important points to keep in mind which will help you to stay focused and make the best trading decision.
Check the currency pairs which you are trading
Being familiar with the currency pairs in which you trade is critical to your success in the market.
Different currency pairs act in different ways, and you need to be aware of the markets that underpin those currencies as well so that you can stay on top of any significant events in the nations where those currencies are traded.
Check the bid and ask price
In foreign exchange trading, the bid-ask spread is extremely important. This amount is the difference between the lowest sell price and the highest buy price, in general terms.
It is possible that a bigger spread indicates weaker liquidity and vice versa. As a result, keep an eye on the spread and make trades in accordance with it.
Check the leverage ratio you are using
Leverage, which is a financial mechanism that is essentially borrowed money, can be either your best friend or your worst enemy. On the plus side, it enables you to conduct huge volume trades with a relatively small amount of initial investment funds.
However, using too much leverage in conjunction with trading losses can make it difficult to return the borrowed funds.
Refer to your Forex trading strategy
When it comes to trading currencies, there are numerous different forex techniques to consider. Based on the market movements and your trading objectives, there are numerous tactics you can use, ranging from scalping and day trading to trend trading and swing trading, among other things.
Refer to your trading plan
You should also have a trading plan in place so that you can execute your transactions objectively and with sufficient knowledge. Having a plan also ensures that you stay on track with your trading objectives before you buy or sell foreign exchange contracts.
Check your emotions again
Once again, make sure to take your emotions and biases out of the decision-making process. The foreign exchange market is extremely volatile, and it is easy to become overwhelmed by it. However, despite the numerous price fluctuations, it is critical to maintaining objectivity and impartiality.
Post-Trading Checklist
When you are exiting a position, and after the position has closed, there are several points that you should consider in order to ensure that you close the position correctly and to prepare for your next trade.
Check when to close the position
After you have established a Forex trading position, the most important choice you will have to make is when to close out the trade.
If you want to liquidate an open trade, you can take the opposite position in the same contract that you are presently holding in your account, which is known as a reversal position.
Traders may typically close positions for one of three reasons: (1) to protect capital; (2) to protect profits; or (3) to protect profits. In all of these cases, the following criteria have been met:
- The profit targets have been met, and the deal has been closed out at a profit.
- The stop-loss levels have been hit, and the transaction has been closed off at a profit.
- It is necessary to close out the trade in order to meet margin requirements.
Check if you need to exit a rising position
One method of exiting a position is to use a limit order to place an exit order that will trigger automatically when prices hit a certain objective.
Other options include keeping an eye on the market and placing an order in real-time as the market fluctuates. When they believe the price has reached a predetermined point, they enter a closing order, which can be either a market or a limit order, to leave the position.
In all instances, the trader is selling to close their long position for a profit, however, the outcomes of the trades may change depending on the exit strategy the trader uses to conclude the trade in question.
Each exit strategy has a set of elements that influence the outcome of the deal in one way or another. Placing a closing order ahead of time has the advantage of not requiring a trader to be present in front of their computer for the order to be filled.
Although it has its advantages, placing an order in advance has its disadvantages as well.
A trader who places an order in advance may exit before the move is complete, and they could have closed out the position for more profit if they were monitoring the move in real-time instead of placing the order in advance.
The trader who waits and enters their close order once the price hits their target may be able to time the conclusion of a move to maximize gains, but he or she runs the risk of holding a position for too long and missing the opportunity to exit before the market retraces its previous course.
Check if you need to exit a losing position
Another method of exiting a trade is to monitor the price in real-time and put an order to leave the deal when the price hits a certain level, either using a market or limit order. Each technique for exiting a losing position has its own set of issues to take into account.
The advantage of placing an exit order with a stop in advance is that traders will not have to be at the computer to handle a loss. However, the disadvantage is that traders may find they quit too soon and are filled only to have the price swing back in their favor.
If a trader waits for an exit signal, he or she may end up staying in a trade for a longer period of time and incurring a greater loss than anticipated.
However, a trader who is observing the market in real time may be able to schedule an exit based on the natural movement of the market and take price fluctuations into consideration.
Check for a margin call
In addition, the trader may be forced to close a position because they have received a margin call and are required to close their trade regardless of the current market price.
Brokers will either tell their clients or will automatically liquidate the trader’s positions in order to free up margin on the account.
Investors’ account balances will improve when they close a futures position for a profit on the market. The funds are removed from the traders account and their account balance decreases if they close a futures position at a loss.
Following the conclusion of a deal, the margin that was utilized for that trade is no longer required, and that margin is now available for use if and when the trader wishes to execute another futures order.
Traders will often receive daily statements that detail the trades they have made in their account, as well as any open trades and the cash that are currently accessible in their account, among other things.
Record the events of your trade-in a journal
Trading is about constantly improving your abilities, and one of the most effective ways to do so is to draw on your past experiences.
That is why it is a good idea to keep track of all of your deals, whether they are profitable or not. Immediately following the completion of a trade, take a few moments to jot down a few notes regarding what occurred.
Rather than relying on your memory, write down your thoughts on paper. Having said that, this process does not imply that you should spend too much time thinking about the deal – simply take a few moments to jot down your essential impressions.
Take a break
Trading can be mentally and physically draining at times, even to the point of exhaustion. As a trader, you should never underestimate the importance of getting enough rest.
Make a time block for yourself to accomplish something other than trading. In fact, consider engaging in an activity that does not require you to stare at a phone or computer screen. Forget on the fact that there is a market.
You will be able to stay on top of your trading game by taking a break from the world of trading for a few hours and allowing your mind to clear and your energy to recharge.
Refocus your trading
Take a look over your trade journal if you have one. Take a moment to reflect on your objectives. Consider how far you’ve come in your trading endeavors thus far.
Consider all of the things you can still accomplish. Having a winning mindset and a good attitude can make a significant difference in one’s ability to conduct successful trading.
Conclusion
It is critical to have a trading checklist in place as part of the trading process since it helps traders stay focused, keep to their trading plan, and gain confidence. When traders use a trading checklist, they are presented with a series of questions that they must answer before executing trades.
It is critical not to make the mistake of conflating a trading plan with the trading checklist. The trading plan is concerned with the big picture, such as the market you are trading and the analytical method you have chosen to use.
Rather than looking at each individual deal, the trading checklist focuses on the requirements that must be completed before a trade may be executed.
All of the information presented above is of little value if it does not correspond to the trading strategy.
Deviating from the trading plan will result in a mixed bag of results and will only serve to frustrate the trader’s efforts. Maintain adherence to the trading plan and refrain from placing trades until the trading checklist has been completed and the trade has been approved for execution.
Top 4 Brokers
