Pre-trade checklist versus automatic stops

Name the next move first

A Pre-trade checklist can start by deciding whether the next move is a hard Stop-loss order, a monitored alert, a half-share cut, or no action at all.

That choice is then bound to market state, instrument type, and how closely the desk can watch the book.

A uniform stop as process risk

A uniform 1% equity stop on every trade can be treated as a source of process risk, not only as a loss cap, because the stop itself can be hit and then reverse.

Alerts when the screen can be watched

When a trader can watch the screen through the session, nonlethal alerts can replace automatic stops so market state, time of day, and nearby news can be checked before an exit.

Hard or partial stops remain the fallback when positions cannot be monitored in time.

Match the control to the book

Alert and stop percentages should change with stock beta and with whether the book is a naked directional trade or a hedge or pair.

Naked directional trades can use tighter control and half-share size so a reversal leaves inventory while a continued move has already reduced exposure.

Firm-level review when the account moves

Firm-level monitoring can flag an account that is down 10% or up 25%, then inspect open and closed positions before deciding whether the trader has already covered the risk.

If risk is still open after that review, managers or traders are contacted so the desk can interrupt continuing exposure.

A session used as a process lesson

On the 6 May 2010 session the described desk recorded fewer than 10 concern accounts, no six-figure losses, and later treated the day as a risk-process lesson for traders.