Step 1
State the decision and thesis (not the ticker)
Write one sentence: why you would own the business and what would make the thesis wrong. If you cannot explain the driver in plain language, you do no...
Keyword: pre trade checklist investing
Pre-Trade Checklist Template for Disciplined Investing
Use this pre-trade checklist template to confirm thesis, valuation band, downside scenario, position sizing, and execution rules before placing an order.
A pre-trade checklist is a short, repeatable set of gates you must pass before you buy or add to a position. It protects you from impulse entries by making you write down what must be true, how you will know, and how much you can lose if you are wrong. This template turns those gates into a decision record: thesis and evidence, valuation range, risk budget, execution rules, and a scheduled review date—so you can say “no trade” just as confidently as “buy.”
30-second action
Turn this page into one decision step
Pick the smallest next action now: test your bias pattern, run a scenario, or copy a prompt before making a portfolio move.
Quick Take
- State the decision and thesis (not the ticker)
- Define evidence and invalidation triggers
- Set valuation band and downside scenarios
Visual Playbook
Step 2
Define evidence and invalidation triggers
Turn the thesis into 3–5 observable checks (business metrics, competitive signals, balance-sheet constraints, or management actions). Add a pre-commit...
Step 3
Set valuation band and downside scenarios
Write a valuation band (conservative, base, optimistic) and one downside scenario. You are not predicting a price; you are mapping a range of outcomes...
Framework
1) State the decision and thesis (not the ticker)
Write one sentence: why you would own the business and what would make the thesis wrong. If you cannot explain the driver in plain language, you do not have an idea yet—only a quote. Also define the holding period you are underwriting.
2) Define evidence and invalidation triggers
Turn the thesis into 3–5 observable checks (business metrics, competitive signals, balance-sheet constraints, or management actions). Add a pre-commitment rule: what specific evidence would force you to pause, reduce, or exit—without negotiating in the moment.
3) Set valuation band and downside scenarios
Write a valuation band (conservative, base, optimistic) and one downside scenario. You are not predicting a price; you are mapping a range of outcomes. If you cannot explain why the downside is bounded, cap the size or skip the trade.
4) Allocate risk budget before position size
Decide the maximum loss you are willing to accept and convert that into a position cap. If you would not sleep with the full size on, the size is too big. Size from downside tolerance first, then expected upside—not the other way around.
5) Predefine execution rules and a review date
Write entry bands, add and reduce rules, and one “no trade” condition that stops you from forcing a setup. Schedule the next review date and what you expect to learn by then. Your checklist is complete only when the review plan is written down.
Template Snapshot
Decision fields to lock before execution
- Thesis in one sentence
- Invalidation trigger and evidence threshold
- Risk budget and position-size boundary
- Review date and expected catalyst window
Action Checklist (Shareable)
- Write your decision objective in one sentence before reading price action.
- Run at least one relevant case in KeepRule Scenarios (/scenarios).
- Tie the action to one principle and one invalidation trigger (/principles).
- Set position size from downside tolerance first, then expected upside.
- Schedule a 7-day post-mortem using the same checklist before any new change.
Share Kit
Why KeepRule
- Structured decision system across Scenarios, Principles, Masters, and Prompts.
- Built for repeatable execution, not one-off opinions.
- Designed for long-term investors who want fewer emotional mistakes.
Recommended KeepRule Paths
FAQ
Do I need a pre-trade checklist for long-term investing?
Yes. Long-term investing still has short-term temptation. A checklist reduces “story drift” by forcing you to define the thesis, evidence, and risk limits before you get anchored by price action. The goal is fewer emotional exceptions, not faster trading.
What counts as a good invalidation trigger?
A good trigger is specific, observable, and tied to the thesis driver (not a vague feeling). Examples: a key unit metric breaks for two quarters, leverage exceeds your hard cap, management changes capital allocation policy, or competition removes pricing power. Price alone is rarely a thesis trigger.
How many checklist items should I use?
Keep it short and strict: 10–15 high-signal checks usually beat a long list nobody follows. If an item does not change your decision, remove it. If an item is always “yes,” rewrite it into something measurable (with a threshold or time window).
Can this checklist reduce overtrading?
Often, yes. The checklist adds friction and makes you pay the “thinking cost” upfront. Many low-quality ideas fail at the thesis or evidence step, and the position-size step prevents turning a small impulse into a large mistake. If you still overtrade, tighten the “no trade” condition.
When should I skip a trade even if the checklist looks good?
Skip when you cannot define the downside, when the position would be sized from hope rather than risk budget, or when the decision depends on a single fragile assumption you cannot observe. A checklist is a safety net, not permission to force a trade.
Install your pre-trade gate today
Use this checklist on one pending trade, write your risk budget and triggers, and only then decide whether the trade deserves capital.