A checklist, psychology gate, and moving-average procedure

One sequence for action and abstention

The illustrated process required a written sequence to finish before a trade was entered, exited, or left untouched. A checklist-process was that written pre-trade sequence. It turned rule inputs, market state, and execution limits into one allow, reduce, or stand-aside decision.

The same process included a trading-psychology-process: a planned gate that treated fear after adverse moves and greed after favorable moves as inputs that can veto size increases and force abstention. Directional market-state reads used a moving-average together with support-resistance and momentum as inputs to that same decision process.

Maximum loss per position before size

The illustrated process required a maximum loss per position to be set while the trading plan was being written, before size was chosen. Maximum loss per position is the largest account fraction a single trade may lose, set before size is calculated.

In a $10,000 hypothetical, ten successive losses at 2% of remaining capital reduced the balance to $8,337.51. In the same $10,000 hypothetical, ten successive losses at 10% of remaining capital reduced the balance to $3,874.22.

Restoring the 2% path to the starting balance was described as needing a 20% gain on remaining capital. Restoring the 10% path was described as needing a 150% gain.

The planned setup used a 1:2 planning risk-to-reward ratio together with smaller size and explicit treatment of losses as a recurring operating cost. The planning risk-to-reward ratio is the planned loss versus planned gain that must be present before a setup is accepted.

Fear, greed, and planned action

Fear after an adverse move was described as blocking the planned action. Greed after a favorable move was described as inflating size and profit-seeking.

The trading-psychology-process treated those states as gate inputs, not as reasons to enlarge size. The allowed responses after a losing streak were to accept the loss, reduce size, or change the setup.

Market state from a moving-average baseline

A moving-average, in this case, was an explicit price-average baseline, used with support, resistance, and momentum, to describe whether conditions favor action or standing aside.

Directional market-state reads used those inputs together. They entered the same decision process as the other rule inputs.

What the decision journal stored

The review log was specified as a decision journal: a structured log of entry, exit, instrument, stop, target, result, size, drawdown, setup, and a short comment used to audit later choices.

Later review could test stop distance, early partial exits, and size errors.

Editorial reading of the workflow

TradersWeek editorial reading: the historical workflow is presented here as a single testable procedure. A pre-trade checklist, a psychology gate that blocks the loss-recovery impulse, and a moving-average market-state filter are read as tests that must all pass before entry, exit, or standing aside is allowed.

That combined-gate reading is editorial. The archive facts describe the historical workflow. They do not, in this article, establish a present-day result.