Practical Checklist of 15 Situations When Traders and Investors Should Avoid Opening Trades: Trading Psychology, Emotion Management, and Capital Protection in Global Markets.
Why This Matters: Overtrading as a Hidden Cost
In global markets—ranging from US and European stocks to currencies (FX), commodities, and cryptocurrencies—losses often occur not due to an “incorrect” forecast, but rather from an inappropriate mindset. Overtrading turns volatility into a personal enemy: you pay spreads and commissions, worsen your entry price, increase leverage, elevate the frequency of mistakes, and reduce decision quality. For both investors and traders, discipline is not just a moral principle; it is a crucial element of risk management and capital protection.
The Principle of “Do Not Trade” - Not a Prohibition, but a Quality Filter
The phrase “do not trade” may sound radical, but its meaning is pragmatic: trading is a privilege granted only after passing specific filters. In an environment where news, social media, and “hot tips” from the US, Europe, and Asia create constant noise, your trading plan must function as a gateway system. If the filters are not passed, the trade does not deserve to exist—even if it “seems like the right time.”
- The Goal of the Trader's Checklist: to reduce the proportion of emotional trading and increase the share of planned trades.
- Result: fewer trades, but with higher expected value and a more stable equity curve.
- Key KPI: the quality of executing the trading plan, not the quantity of entries.
Checklist of 15 Situations: When “Not Trading” is the Best Trade of the Day
Use this list as a pre-trade check. If any point triggers a response, press “Pause” instead of “Buy/Sell.”
- If you urgently need money — do not trade. Urgency breeds excessive risk, leverage, and attempts to “accelerate life” through the market.
- If you feel excitement — do not trade. Excitement distorts risk management and turns trading discipline into a game.
- If you don’t want to trade — do not trade. Coercion decreases attention and execution quality.
- If you don’t see good options but are desperately trying to find them — do not trade. This is a classic scenario of overtrading.
- If you fear missing a trade (FOMO) — do not trade. Fear of missing out almost always leads to worsening entry prices and late decisions.
- If you want to take revenge on the market (revenge trading) — do not trade. Revenge trading leads directly to a series of losing trades and increased leverage.
- If your intuition warns you “not worth it” — do not trade. Often, this is a signal of a subtle violation of your trading plan or an unaccounted risk.
- If you are feeling upset or down — do not trade. Negativity distorts probability assessments and increases the tendency to “force” a trade.
- If you are euphoric — do not trade. Euphoria creates an illusion of control and leads to excessive risk.
- If you are tired, ill, irritated, or preoccupied with personal matters — do not trade. Fatigue reduces reaction times, memory, and discipline.
- If you read somewhere that “now is the best time to trade” — do not trade. Someone else’s assertion does not replace your model, risk profile, or time horizon.
- If you missed an entry and want to “jump on the last train” — do not trade. Chasing movement is a common source of poor risk/reward ratios.
- If the trade does not fit your trading plan — do not trade. Without a plan, you are trading emotions, not ideas.
- If you do not understand what is happening in the market — do not trade. Uncertainty in market conditions (trend/flat/news spike) increases the probability of mistakes.
- If you have already reached your daily trade limit — do not trade. A limit is part of risk management and protection against overtrading.
Admission Rule: Trade only when you have exhausted all reasons not to trade. This is the foundation of psychological capital protection.
How to Turn the Checklist into a System: 30 Seconds to Entry
To ensure that trading psychology does not remain just a "nice idea," turn it into a procedure. Before every trade, answer “yes/no” to four questions:
- Mental State: Am I calm and focused, without FOMO or the urge to make up for losses?
- Plan: Is this a trade from my trading plan, with a clear scenario and cancellation level?
- Risk Management: Are my stop level, position size, and risk percentage of capital defined?
- Context: Do I understand the market environment (US/Europe/Asia), current liquidity, and volatility?
If at least one answer is “no,” the trade is prohibited. This simple logic significantly reduces emotional trading, especially during periods of news turbulence.
Risk Management vs Emotions: What to Document in Your Trading Plan
The trading plan is a contract with oneself. It should be brief, executable, and measurable. For investors and traders operating in global markets, it is sufficient to establish the following rules:
- Risk Limit per Trade: a fixed percentage of capital (e.g., 0.25%–1.0%), without exceptions.
- Daily Stop-Loss Limit: a loss level at which trading ceases until the next session.
- Daily Trade Limit: a predetermined number of entries; exceeding this is a sign of overtrading.
- Entry Standards: setup criteria, confirmations, and conditions for “not trading.”
- Ban on “Chasing”: no increasing leverage or doubling positions after a loss.
These points transform trading discipline into a technology: emotions remain but do not dictate volume, leverage, or trade frequency.
The Global Context: Why Noise is Particularly Dangerous for Investors
The influx of information on US stocks, European indices, Asian markets, oil, and currencies creates the illusion that “something unique is happening right now.” In practice, uniqueness often pertains more to headlines than to your risk profile. When you react to every impulse, your strategy disintegrates into improvisation. And the higher the volatility, the quicker overtrading erodes capital—through worsened prices, slippage, and a chain of “emotion-driven” decisions.
The psychology of trading here is simple: you are not obligated to participate in every movement. You are obligated to protect your capital and act per your plan.
Mini-Protocol for Recovery After a “Blown” Day
If you have broken the rules (exceeded trade limits, traded from FOMO, or attempted to recover losses), a brief protocol is necessary to regain control:
- Stop trading for 24 hours or until the next session, regardless of any “opportunities.”
- Evaluate 3 Facts: What did I feel, what rule did I break, and what was the cost of the violation in terms of money and capital percentage?
- One Corrective Point in the trading plan (not ten): for example, reduce risk per trade or decrease the number of trades.
- Return with Minimal Risk on the first 3-5 trades to restore execution discipline.
This way, you transform a “failure” from an emotional drama into a manageable risk management process.
Final Thought: Discipline as a Competitive Advantage
In highly competitive global markets, an advantage is rarely created by a “super idea.” It is created through a stable process: a trading plan, risk management, trade limits, and the ability to tell oneself “do not trade” at the moment when you feel like hitting the button. The checklist of 15 points is a practical tool that filters out impulsive decisions, reduces overtrading, and helps investors and traders preserve what matters most—capital and clarity of thought.
