Appendix B
The Trader's Operating System
If you keep a small trading sleeve, run every trade through this. Awareness does not change behaviour. Checklists do.
Before the trade
- What is the setup, and what confirms entry?
- What regime am I trading, and does this setup fit it?
- Where is the trade invalidated, at an exact price?
- Maximum loss in dollars, decided now?
During the trade
- What would justify adding or reducing? If unwritten, nothing does.
- Am I following the plan, or reacting to the last candle?
After the trade
- One-line journal: reason in, planned exit, what happened
- Would I take the same trade again?
- After any losing exit, no new trade for twenty-four hours.
Position sizing
Risk a fixed small percentage per trade. The stop placement sets the share count, never the other way around. The formula is simple: maximum dollars at risk ÷ distance to stop = share count. Allow a $200 loss with the stop $4 below entry, and the position is 50 shares. Ten losers in a row should be annoying and survivable, not fatal.When setups dry up
When you cannot find good setups, that is information. Lower your exposure, not your standards. If a watchlist that used to be full goes quiet while you are still fully invested or on margin, cut leverage first, then trim. A dry watchlist is the market telling you to step back.