A step by step guide for beginners — including when NOT to trade

1. Check Your Emotional State (Before Any Charts Open)

If you feel rushed, angry, tired, bored, or desperate to “make money today,” do not trade.
A beginner’s biggest losses come from emotional urgency, not technical mistakes.

Ask yourself:

• Am I calm
• Am I patient
• Am I trading my plan, not my mood
• Am I okay with not trading today

If the answer is “no” to any of these, stop here.
Summary: Your mind is your first indicator. A stressed trader sees what they want to see, not what’s there.

2. Check the Economic Calendar (Avoid Landmines)

Look for:

• High impact news (NFP, CPI, interest rate decisions)
• Speeches from central bank officials
• Unexpected geopolitical events

If major news is due within the next 60 minutes, do not trade.
Beginners cannot handle the violent whipsaws.

Summary: News volatility is unpredictable. Professionals step aside; beginners should too.

3. Check Market Conditions (Is This Even a Good Environment)

Look at:

• ATR (Is volatility extremely high or extremely low)
• Volume (Is the market active or dead)
• Spread (Is it unusually wide)

Do not trade if:

• ATR is spiking (market is chaotic)
• ATR is extremely low (market is asleep)
• Volume is thin (price moves unreliably)
• Spreads are wider than normal (your costs increase)

Summary: You need a stable, liquid environment. Not chaos. Not stagnation.

4. Identify the Market Structure (Trend, Range, or Mess)

Ask:

• Is the market trending up
• Trending down
• Ranging
• Or choppy with no direction

Do not trade if the chart looks like “noise”—overlapping candles, no clear highs/lows, unpredictable wicks.

Summary: If you can’t describe the market in one sentence, you shouldn’t trade it.

5. Check Key Technical Indicators (Your Diagnostic Toolkit)

Use your core beginner friendly tools:

• RSI → Overbought/oversold or neutral
• Bollinger Bands → Expansion (volatility) or squeeze (compression)
• Moving Averages → Trend direction and strength
• Volume → Confirmation or warning

Do not trade if indicators contradict each other.
Example:

• RSI says “overbought”
• Price is breaking out
• Volume is falling

This is a trap for beginners.

Summary: When indicators disagree, the market is confused. Don’t step into confusion.

6. Check Sentiment (The Mood Behind the Moves)

Use:

• Fear & Greed Index
• COT Report (bigger picture, not intraday timing)
• News sentiment
• Market heatmaps

Do not trade if sentiment is extreme.
Extreme fear or extreme greed creates irrational moves that beginners cannot manage.

Summary: Sentiment tells you whether the crowd is emotional. Emotional crowds create dangerous charts.

7. Identify Your Setup (One of Your Approved Strategies Only)

Ask:

• Is this one of the setups in my trading plan
• Does it meet every rule
• Is the entry clear
• Is the stop loss obvious
• Is the target realistic

Do not trade if you are “forcing” a setup.
If you have to convince yourself, it’s not real.

Summary: Your strategy should appear naturally. If you’re hunting for it, it’s not there.

8. Check Risk (Your Safety Net)

Confirm:

• Position size matches your risk rules
• Stop loss is placed at a logical technical level
• Reward to risk is at least 2:1
• You are not over exposed to correlated markets

Do not trade if:

• You can’t find a safe stop loss
• The reward is too small
• You’re risking more than your plan allows

Summary: If the risk doesn’t make sense, the trade doesn’t make sense.

9. Final Pre Trade Questions (The Beginner’s Safety Brake)

Ask yourself:

• Would I take this trade if it were a demo account
• Would I explain this trade confidently to someone else
• Am I okay if this trade loses
• Does this trade align with my plan, not my emotions

If any answer is “no,” do not trade.

Summary: A good trade is one you can justify calmly, even if it loses.

10. After the Trade (Win or Lose) — Journal It

Record:

• Why you took the trade
• What indicators you used
• What happened
• What surprised you
• What you learned

This is how beginners become competent traders.

WHEN THE CHECKLIST SAYS DO NOT TRADE” —

A SIMPLE SUMMARY

You should not trade when:

• You are emotional and major news is imminent
• Volatility is extreme (too high or too low)
• Market structure is unclear
• Indicators contradict each other
• Sentiment is extreme
• You don’t see a clean setup
• Risk doesn’t make sense
• You cannot justify the trade calmly

In short:
If the environment is unclear, unstable, or emotional — step aside.

My real goal is to help people to develop an income from investing that will make their employment optional. I have developed a library of books on Personal Finance that are largely jargon free and help establish a foundation of how money really works. No matter how constrained your income is you can make decisions that result in growing your wealth over time.

You can find my library at addingtowealth.com/?page_id=18 more details are on the Book Index page and don’t forget to check out the growing list of blog posts.

But if you insist that Day Trading is your desire then you can download a FREE copy of Day Trading – Beginner to Winner at https://addingtowealth.com/wp-content/uploads/2026/04/Day-Trading.pdf