Most losing trades actually start before the trade is even entered.
Not because the strategy is necessarily bad.
But because there was no clear process before entering the trade.
Over the last few years I’ve spent a lot of time studying technical analysis, trading a momentum strategy, and reviewing charts inside our trading community. And I see the same pattern again and again.
Many traders jump into positions without a clear framework.
They see a stock moving.
They feel the pressure to act.
And they enter without checking whether the trade actually makes sense.
This article walks through the exact checklist I personally use before entering a trade.
We’ll cover:
- How to check market structure
- How to identify support zones
- The indicators I use to confirm confluence
Because once you start using a structured checklist, something interesting happens.
Trading becomes much calmer.
Instead of reacting emotionally to price movements, you begin evaluating trades objectively.
If you’ve ever entered a trade, watched it go against you, and later realized you probably shouldn’t have taken it in the first place…
This checklist will likely make a lot of things click.
Before we begin, if you’d like to learn the full strategy in more detail, you can join our free trading community on Skool where the full Momentum Trading course is available along with weekly live Q&A sessions.
You can join here: https://skool.com/trading
The Goal of the Checklist
The goal of this checklist is simple.
Identify bullish stocks that are pulling back into support.
The strategy itself is built on one core rule.
Only buy support. Never buy resistance.
You don’t need every indicator to align perfectly.
The goal is simply to stack probabilities in your favor by identifying areas where buyers are likely to step in.
Step 1 — Market Structure (Start Here)
The first thing I always check is market structure.
I start with the weekly chart.
What I’m looking for is:
- Higher highs
- Higher lows
- A bullish trend
- Or a clear change of character (CHOCH)
I also mark previous support and resistance levels.
If the weekly chart looks bearish, I zoom out to the monthly chart.
Sometimes a stock is simply retracing on the weekly while still being bullish on the monthly timeframe.
But if both the weekly and monthly charts are bearish, I usually move on to another stock.
One thing I’ve noticed studying charts is that many strong trades actually start during pullbacks into higher lows.
That’s why checking higher timeframe structure first is so important.
Step 2 — Ichimoku Cloud
Next I add the Ichimoku Cloud.
This indicator quickly helps identify the overall trend and potential support or resistance levels.
A simple rule applies here:
If price is above the indicator, it tends to act as support.
If price is below the indicator, it tends to act as resistance.
Some general observations:
- Price above the cloud usually indicates a bullish trend
- Price below the cloud suggests resistance overhead
The Ichimoku Cloud also includes two important lines:
- Conversion Line – short-term momentum
- Baseline – mid-term momentum
Pullbacks below these lines often occur during normal corrections and don’t always invalidate the trend.
Step 3 — Moving Averages
Next I add three moving averages:
- 50 SMA
- 100 SMA
- 200 SMA
Moving averages act as dynamic support levels.
Things I look for include:
- Price holding above a rising 50 SMA
- Pullbacks toward the 50, 100, or 200 SMA
When price retraces toward one of these moving averages while other signals align, it can create a strong support zone.
The slope of the moving average is also important.
Upward sloping averages suggest the trend may continue higher.
Step 4 — Fibonacci Retracement
Next I draw a Fibonacci retracement.
This is typically done from a swing low to a swing high.
Fibonacci levels help identify areas where a stock may retrace before continuing higher.
Some key levels I watch include:
- 0.702
- 0.786
- 0.886
These zones often attract buyers.
Fibonacci levels are useful on their own, but they become much more powerful when they align with other indicators.
Step 5 — Gann Squares
Next I add a Gann Square.
This tool helps identify market symmetry and reaction zones.
Things I watch for include:
- Horizontal Gann levels
- Angles
- Arcs
When Gann levels align with Fibonacci levels, moving averages, or previous support zones, this creates strong confluence.
Step 6 — Bollinger Bands
Finally, I check Bollinger Bands.
These help determine whether price is extended or near potential support.
General idea:
Price near the lower band may indicate potential support.
Price near the upper band often indicates potential resistance.
Buying when price is already extended near the upper band increases risk.
Step 7 — Evaluate Confluence
Now comes the most important step.
Do multiple tools point to the same support zone?
Ask yourself:
- Is price closer to support than resistance?
- Are multiple indicators aligning in the same area?
- Am I buying support, or chasing price?
If the indicators suggest resistance rather than support, the best decision is often to wait.
Patience is one of the most important skills in trading.
Step 8 — Entries and Position Size
If the trade passes the checklist, the next step is determining position size.
Position size reflects conviction and risk.
Smaller entries are used for weaker setups or higher volatility.
Larger entries are used when strong confluence is present.
One important rule I follow is that no single position exceeds 10% of my portfolio.
For breakouts, I prefer waiting for a breakout and backtest rather than chasing the move.
The Most Important Rule
The most important rule in this entire strategy is simple.
Only buy support. Never buy resistance.
Weakness inside a bullish trend often creates opportunity.
Chasing price usually creates unnecessary risk.
Recap: The Pre-Trade Checklist
Before entering a trade, I run through this process:
- Check weekly and monthly market structure
- Review the Ichimoku Cloud
- Check moving averages
- Draw Fibonacci retracements
- Identify Gann levels
- Check Bollinger Bands
- Look for confluence
- Decide entry and position size
The entire process usually takes just a few minutes.
But it filters out a huge number of low-probability trades.
One thing I’ve learned from studying charts and reviewing trades with other traders is this:
Successful trading usually comes down to structure and patience.
Most mistakes happen when traders enter without a clear process.
A checklist helps remove that emotion.
Learn the Full Momentum Strategy
If you’d like to learn the full strategy and see how these tools are used step-by-step, you can access the free Momentum Trading course inside our community.
Join here: https://skool.com/trading
Inside the community you’ll find:
- The full Momentum Trading Kickstart course
- Weekly live Q&A sessions
- Chart breakdowns and discussions with other traders
It’s completely free to join.
