Pre-trade checklist

Definition

A pre-trade checklist is a fixed sequence of checks run before EVERY entry — the trading application of the checklist discipline whose efficacy is documented in aviation and surgery (Gawande’s synthesis: experts fail less from ignorance than from skipping steps they know, under pressure). The transfer to trading is labeled practitioner, but the mechanism it targets is KB-documented: most costly errors are process failures — wrong size, missed event on the calendar, undefined exit, correlation blindness — committed by traders who knew better (bias-overconfidence in action). The checklist converts the trading plan from intention to gate.

How it works / structure

• The core gates (each maps to a KB entry): THESIS — written, falsifiable, with the invalidation marker stated (disc-trading-plan’s falsifiability rule); SETUP — matches a named playbook entry or is labeled experimental with reduced size (disc-playbook-setups); SIZE — computed from the sizing rule, not felt (risk-fixed-fractional or the account’s declared method); EXIT — stop and target defined BEFORE entry, gap risk considered (mgmt-stop-loss mechanics); CALENDAR — earnings, ex-dividends, macro releases, expirations checked (event-earnings, opt-pin-risk windows); PORTFOLIO — correlation to existing book, aggregate exposure after the add (risk-correlation-exposure); INSTRUMENT — spreads, liquidity, borrow, assignment exposure per the mechanics entries.
• Design rules (from the checklist literature): SHORT (5-9 items — long lists get skipped, the documented failure of over-designed checklists); BINARY (each item passes or fails — no judgment calls inside the checklist; judgment lives in the plan); KILLING (any failure blocks the trade or forces explicit, logged override).
• The override log (engine-relevant): overrides happen — the discipline is LOGGING them; the documented pattern from review practice (disc-post-trade-review): override-flagged trades underperform checklist-clean trades in most journals — a per-account testable claim and the checklist’s own validation loop.
• Automation seam: every gate above is machine-checkable against account and market data — the checklist is the natural contract between a trading engine and its human (the engine runs the gates; the human owns the overrides).

When it applies

Every entry without exception — the checklist’s value is precisely that it runs when you least want it (late-day revenge trades, oversized “conviction” adds); scaled variants for adds/rolls (mgmt-scaling, mgmt-rolling have their own gate subsets); crisis regimes (checklists matter MOST when volatility compresses decision time — the aviation finding transferred).

Risk profile & failure modes

• Checklist theater: running the list after deciding — confirmation, not gating; the tell is an override log that is empty while returns decay (bias-overconfidence’s camouflage).
• Over-specification: 30-item lists produce skipping under exactly the pressure they exist for — the documented aviation lesson; keep the killing items, move the rest to the plan.
• Stale gates: calendars and correlation snapshots age — a checklist run on yesterday’s data passes trades today’s data would block; gate data freshness is part of the gate.
• False security: a passed checklist validates PROCESS, not thesis — clean-process losing trades are normal (disc-process-vs-outcome); the checklist prevents unforced errors, not losses.

Evidence & limits

Checklist efficacy evidence is from aviation/medicine (Gawande’s synthesis of the documented trials — the surgical-checklist mortality reductions); the transfer to trading is practitioner-labeled, with the override-vs-clean performance comparison as the per-account validation instrument the KB recommends.

Falsifiable-thesis examples

Illustrations only, not signals:

• “Override-flagged trades underperform checklist-clean trades in this account over 100+ trades (checklist-validity check)” — falsified by the tagged-journal comparison.
• “Calendar-gate misses (trades entered with unnoticed scheduled events) exceed the account’s average loss size (gate-value check)” — falsified by the loss-attribution audit.

Cross-references

• The documents it gates: disc-trading-plan, disc-playbook-setups
• The review loop: disc-post-trade-review, disc-journaling-review
• The gate sources: risk-fixed-fractional, risk-correlation-exposure, opt-pin-risk