Trade Execution Checklist

Trade Execution Checklist

When to use this skill

Use when the user:

• Is about to execute a trade and wants a sanity check
• Needs help with position sizing and risk management
• Wants a structured framework for trade planning
• Asks about stop-loss placement or take-profit levels
• Needs to evaluate their risk-reward ratio before entering

Pre-Trade Checklist

1. Trade Thesis Validation

Before any execution, confirm:

• Clear thesis: Can you state in one sentence why this trade should work?
• Catalyst: What will drive the price in your direction? (news, technical level, on-chain event)
• Timeframe: Is this a scalp (hours), swing (days-weeks), or position (weeks-months)?
• Edge identification: What do you know or see that the market might not be pricing in?
• Invalidation: At what specific price or condition is your thesis wrong?

2. Position Sizing

Calculate appropriate size using these rules:

• Risk per trade: Never risk more than 1-2% of total portfolio on a single trade
• Position size formula: Position Size = (Portfolio * Risk %) / (Entry - Stop Loss)
• Maximum position: Even with tight stops, cap single positions at 5-10% of portfolio
• Correlation check: Are you already exposed to this sector? Avoid stacking correlated positions

Example calculation:

• Portfolio: $50,000
• Risk per trade: 2% = $1,000
• Entry: $100, Stop loss: $90 (10% away)
• Position size: $1,000 / $10 = 100 units = $10,000 (20% of portfolio)

3. Entry Strategy

Plan the entry method:

• Limit vs market: Use limit orders for better fills unless momentum is urgent
• Scaling in: Consider entering in 2-3 tranches (e.g., 40/30/30) to average entry
• Slippage awareness: For low-liquidity tokens, check order book depth first
• Gas timing: For on-chain trades, check gas prices and consider low-activity periods
• DEX vs CEX: Compare execution costs including gas, fees, and slippage

4. Risk Management Setup

Configure protective measures before entering:

• Stop loss: Place immediately after entry — never trade without one
  • Below recent swing low for longs
  • Above recent swing high for shorts
  • Account for typical volatility — avoid stops within normal noise range
• Take profit targets: Set at least 2 levels
  • TP1: 1:1.5 risk-reward — take 50% off
  • TP2: 1:3 risk-reward — take remaining or trail stop
• Risk-reward ratio: Minimum 1:1.5, ideally 1:2 or better
• Maximum loss scenario: If everything goes wrong, what do you lose?

5. Execution Checklist

Final checks before clicking "buy" or "sell":

• Thesis is clear and written down
• Position size is within risk limits (1-2% risk)
• Entry price and method determined
• Stop loss level set (and will be placed immediately)
• Take profit targets defined (at least 2 levels)
• Risk-reward ratio is >= 1:1.5
• Not already overexposed to this sector
• Checked for upcoming events (earnings, unlocks, macro) that could override technicals
• Emotional state check — not revenge trading or FOMO buying
• Sufficient liquidity to exit at intended size

6. Post-Entry Management

After the trade is live:

• Move stop to break-even after TP1 is hit
• Trail stop on remaining position using ATR or swing structure
• Time stop: If the trade hasn't moved in your expected timeframe, re-evaluate
• Journal the trade: Record entry reason, size, levels, and emotional state

7. Output Format

For each trade evaluation, provide:

• Trade: Asset, direction (long/short), timeframe
• Entry: Price and method
• Stop loss: Price and distance from entry (%)
• Take profit: TP1 and TP2 prices
• Risk-reward: Ratio calculation
• Position size: Amount and % of portfolio
• Risk amount: Dollar amount at risk
• Checklist status: Pass / Fail with specific notes
• Recommendation: Proceed / Adjust / Do not trade