{"id":7835,"date":"2019-08-28T11:37:11","date_gmt":"2019-08-28T15:37:11","guid":{"rendered":"https:\/\/optimusfutures.com\/tradeblog\/?p=7835"},"modified":"2019-08-28T11:37:11","modified_gmt":"2019-08-28T15:37:11","slug":"pre-trade-checklist-scoresheet","status":"publish","type":"post","link":"https:\/\/optimusfutures.com\/blog\/pre-trade-checklist-scoresheet\/","title":{"rendered":"Pre-Trade Checklist | Using Scoresheets to Prepare for Your Next Futures Trade"},"content":{"rendered":"

This article on Pre-Trade Checklist is the opinion of Optimus Futures<\/em><\/p>\n

\"Pre-Trade<\/a><\/p>\n

When given the choice between trading objectively and trading solely \u201cfrom the gut,\u201d chances are that an objective approach might suit you better. Elite traders<\/a> (as we covered in a previous article) may be able to combine both, trading intuitively or, as the clich\u00e9 goes, \u201cin the zone.\u201d But rarely would they rely solely on one or the other, as intuitive decision-making often relies on both capacities combined–that is, being able to harmoniously fuse objective and subjective approaches.<\/p>\n

One simple but effective way to make objective decisions while trading is to keep a pre-trade checklist with scoresheet in hand. It isn\u2019t rocket science, but the simplicity of the approach often conceals the much larger benefits that such a trading scoresheet can provide.<\/p>\n

Main Benefits of using a\u00a0 Pre-Trade Checklist with Scoresheets<\/h2>\n

A trading scoresheet can help you with at least three crucial goals, further expanding your capacity to trade in a more flexible and opportunity-rich market environment:<\/p>\n

<\/div>1) It can help prevent you from over-trading:<\/h3>\n

You can decide which trades “deserve” to be executed and which ones to skip.<\/p>\n

2) It can help you optimize your position-sizing approach:<\/h3>\n

Evaluating the trade risks can help you determine the number of Futures contracts to run on each trade. You can move from fixed-position trading to a variable R% trading approach that will not only help you minimize risk but can also help you maximize profit potential.<\/p>\n

3)\u00a0 It can help increase your range of markets:<\/h3>\n

Armed with a scoring method, you can evaluate several markets to see which ones might provide a more favorable reward-to-risk scenario. giving you better and (hopefully) higher-probability trading opportunities.<\/p>\n

So, how might you get started? Here is one simple method to begin scoring trading opportunities before you pull the trigger. Bear in mind that our examples use three parameters to score potential trades. You don\u2019t have to limit yourself to just these three. Each trader is different, so be sure to customize the parameters so as to better align them with your own approach.<\/p>\n

How to Set Up A Pre-Trade Checklist \/ Trading Scoresheet <\/span><\/h2>\n

<\/div>Step 1: Score the Technicals<\/h3>\n

Provide a score from 1 – 10, with 1 = least favorable to 10 = most favorable)<\/em><\/p>\n

Use this score to qualitatively assess technical aspects<\/a> such as support and resistance, chart patterns, indicator\/oscillator readings, etc. There are a few sites (and books) that rank technicals based on past performance. Although the probabilities change over time, such an index might be useful when considering the historical outcome of certain trades. Otherwise, you can base the score on your own knowledge and experience.<\/p>\n

<\/div>Step 2 – Score the Reward-to-Risk Potential<\/h3>\n

Provide a score from 1 – 10, with 1 = least favorable to 10 = most favorable)<\/em><\/p>\n

This is a tricky score because it depends on how much you are willing to risk versus how much you expect to gain in an optimal reward-to-risk scenario.<\/p>\n