Trade with Your Head, Not Your Heart: Develop a Trading Checklist

Create a trading checklist. Why? Because you don't want inner emotions that might not have anything to do with investing get the best of you. trading: trading checklist and trading rules
5 min read
Photo by Getty Images

Key Takeaways

  • Learn stock trading rules to help keep emotions in check.
  • Develop a trader checklist that might assist in maintaining discipline.
  • Learn how trading strategies such as maintaining a daily routine might help prevent mistakes.

Many of us believe we're in control of our emotions when we trade, but sometimes we run into weaknesses. Maybe we become too attached to a stock, or get out of it too soon when it doesn't perform as expected. Let's explore some ideas that can help, including keeping a trading checklist to help prevent emotions from getting the best of us, and applying trading rules that can override the temptations we might otherwise be unable to ignore.

Consider keeping the following trading checklist somewhere handy as you trade and invest. It can help remind your rational self to stay in control of the situation.

Set Trading Rules

Consider establishing some trading rules that can help you snap out of it when emotion comes into play. Of course, different rules apply to different investors depending on their trading strategies and goals, but some general ones can be applied in many situations. Here are some rules you might want to put on your trading checklist:

  • Set up stop losses.
  • Set stringent risk management rules for how much you trade on a daily or weekly basis.
  • Establish strategy rules before putting a trading plan into motion.
  • Try to anticipate several possible moves when entering a trade so you can be prepared to respond without hesitation or doubt.
Fix your brain: Trading rules and trading checklist


Try establishing rules, routines, and other helpful strategies to keep your head in the trading game. 

Get Into a Routine

Many investors and traders set trading standards but abandon them—sometimes mid-trade—because of fear, greed, over-excitement, and so on. Or, they change rules between trades.

Consider setting a routine that you can stick with. It might not be easy to establish, and it takes discipline. Don't get discouraged if it takes time to find a trading routine you're comfortable using. Once you have a routine and your rules in place, however, you might find yourself:

  • Better equipped to deal with the ups and downs of markets.
  • Able to build "bridges" over everything from small potholes (such as that hot stock pick your neighbor gives you) to a major crater like a recession.
  • Able to avoid getting off track when things don't go perfectly.

Don't Obsess About Intraday Market Moves

If you trade on a “daily” timescale where potential buy and sell pricing signals come just once a day, yet you check your trades or charts throughout the day, you’re inviting emotion. After all, your signals (your rules) stipulate that you can only take one action a day, perhaps at day’s end. So checking more often can be a strong sign that you’re too emotionally connected to your trade. It works the other way, too. Are you avoiding your routine, and why? Have losses or unfriendly market conditions made you a bit despondent? Here are some ideas to consider:

  • If you’re feeling antsy, go for a walk.
  • If you need longer or more frequent breaks, change up your routine. For instance, schedule your daily workout in the middle of the day to break up your trade-checking obsession.
  • Consider a one-week challenge and go on an information “diet” that avoids market “entertainment” on TV or elsewhere. Just set a firm date for coming back on board, then stick to it. You don’t want to risk missing out on information that could lead to trading opportunities.

Take Responsibility and Be Ready to Adapt

Individual investors sometimes feel outdone by the scope and speed of an increasingly automated trading world. A missed trade, or an ineffective stop-loss, was wiped out by the big boys, the complaint goes.

But the error often lies with the individual. The trade is too high-risk for the trader’s predetermined risk tolerance. Yet, instead of discarding the trade in search of a new one, he or she trades emotionally, believing the trade will make money with a tighter stop. The reality is that by keeping a tighter stop than the stock price action indicates, the trade risk goes up. Normal price action will wipe out that stop-loss quickly—too quickly. The trader’s normal emotional reaction is to gripe that stop losses don’t work. But it wasn’t the big guys behind that move; it’s likely that a herd of individual investors all set tight stops.

Now's the time to recognize your mistake and work on avoiding it in the future. Here are some potential stock trading rules:

  • Consider avoiding common and popular percentage stop losses.
  • Plan ahead and consider stop-losses based on solid support levels for a stock.

Remember That Your Trades Don't Define You

One common emotional trap is believing that trading defines you as a person. Sure, most of us hold money in high regard. There’s nothing wrong with that. Money supplies our basic needs, but it also feeds our bigger appetites. To many, money means freedom. By that reasoning, it’s no wonder emotion is automatically attached to trading. When you're over-identifying with trading, remind yourself why you trade.

  • Trade because you love the routine (and what’s often, really, a grind).
  • Trade because you love identifying puzzles and solving them.
  • Embrace mistakes and victories equally.
  • Separate emotion from money (not easy to do).

Sometimes all your trading brain needs is a few fixes—in the form of a checklist and some rules. 


Key Takeaways

  • Learn stock trading rules to help keep emotions in check.
  • Develop a trader checklist that might assist in maintaining discipline.
  • Learn how trading strategies such as maintaining a daily routine might help prevent mistakes.

Do Not Sell or Share My Personal Information

Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.

Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.

TD Ameritrade does not make recommendations or determine the suitability of any security, strategy or course of action, for you through your use of trading tools or technical trading indicators.


Market volatility, volume, and system availability may delay account access and trade executions.

Past performance of a security or strategy does not guarantee future results or success.

Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.

Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.

This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.

TD Ameritrade, Inc., member FINRA/SIPC, a subsidiary of The Charles Schwab Corporation. © 2024 Charles Schwab & Co. Inc. All rights reserved.

Scroll to Top