Discipline: the rules you do not break
What the chart shows before the routine starts
Open the EUR/USD chart at 1.0850 and look at the last twenty candles. The chart shows where price has been, not where it will go. Your routine starts by writing down what you see, not what you hope. A candle that closed above 1.0850 is a fact. A candle you think will close above 1.0850 is a guess.
Write the high and low of the last session on paper. On EUR/USD at 1.0850, a normal day might move 60 to 80 pips. If the chart shows a 120 pip day, that is unusual. Your rule can say: if the range is already above 100 pips, I do not open a new trade. That rule comes from the chart, not from a feeling.
The chart also shows the spread. On EUR/USD the spread is often 1 pip or less, but it varies between brokers and widens when news is released. If your stop is 20 pips and the spread is 3 pips, your real risk is 23 pips. The chart tells you the price. The platform tells you the spread. Both go into your notes before any order.
The rules that stay the same when the chart changes
A rule is a sentence with a number in it. 'I will be careful' is not a rule. 'I risk ₱20 on 0.10 lots with a 20 pip stop' is a rule. At 1.0850, one pip on 0.10 lots is 1 unit of the quote currency, so 20 pips is 20 units, which is ₱20 at the rate used here. That number does not change when the chart looks exciting.
Three rules cover most of the damage. First, the stop is placed before the order, not after. Second, after two losing trades in one day, the session ends. Third, no trade is added to a losing position. These are written on the same paper as the checklist. You read them before every order, even when the chart looks obvious.
The SEC Philippines regulates brokers that offer these products to residents, but rules about leverage, spreads and commissions vary between brokers. Your routine cannot fix a broker's costs. It can stop you from taking a trade that your own numbers say is too large. That is the part you control.
How the routine survives a losing day
A losing day is not a failure of the chart. It is a test of the paper. If you wrote 'stop after two losses' and you take a third trade, the paper did nothing. The cost of that third trade is not in your plan. At ₱20 per trade, three extra trades cost ₱60, which is more than a week of planned trades at one per day.
After the session, read the checklist again and mark each item that you filled in with a real number. If an item says 'wait for a clear signal' and you cannot write what 'clear' means in pips, that item failed. Rewrite it as a number before the next session. The routine improves by replacing vague words with figures.
The review takes five minutes. Write the time you started, the time you stopped, the number of trades, and the total cost in pips. Do not write whether you feel good or bad. Feelings change by the hour. The numbers do not. Over a month, the numbers show whether the routine is being followed, not whether the market was kind.
A five-item checklist and what one bad trade costs
| Step | Amount | Note |
|---|---|---|
| 1. Direction written down | EUR/USD, around 1.0850 | the instrument and the level are fixed before the chart is opened |
| 2. Risk in pesos per trade | ₱200 | a fixed amount chosen in advance, not a percentage invented on the day |
| 3. Stop distance in pips | 20 pips | read from the chart, not guessed |
| 4. Position size from the two figures above | 0.10 lots | 20 pips x 1 per pip on 0.10 lots = ₱20; ₱200 divided by ₱20 = 10, so 0.10 lots |
| 5. Time to stop for the day | after two losing trades | written before the session, not after the second loss |
The broker may round the position size, charge a spread and a commission, and quote a slightly different price at the moment the order fills, so the final cost can be a little higher or lower than the figures above.
Doing it once, step by step
You will now write and use a five-item routine for one session on EUR/USD, from the chart to the review.
- 01
Write the five items before you open the chart
Take one sheet of paper and write five lines. Each line must contain a number: maximum loss in pesos, stop size in pips, position size in lots, maximum number of trades, and the time the session ends. If a line has no number, it is not ready. Read the five lines once before you look at any price.
- 02
Read the chart and fill in the numbers
Open the EUR/USD chart around 1.0850. Note the last session's high, low and range in pips. Check the current spread on your platform. If the range is already above your written limit, or the spread is wider than your stop allows, stop here and do not trade. The chart does not decide. Your numbers do.
- 03
Place the stop before the order
Enter the stop price in the platform before you send the order. For a 20 pip stop on 0.10 lots, the risk is 20 units of the quote currency, which is ₱20 at the rate used here. The broker may round the position size and quote a slightly different fill price, so the final cost can be a little higher or lower. Write the actual fill price on the paper.
- 04
Stop after two losing trades
Count each closed trade that hits the stop. When the count reaches two, close the platform. Do not open a third trade because the chart looks better. The ₱200 daily limit divided by ₱20 per trade is 10 trades, but the checklist stops you at two. The limit is not the same as the number of trades allowed.
- 05
Review the paper after the session
Write the start time, stop time, number of trades and total cost in pips. Mark any checklist item you could not fill with a real number. Rewrite that item as a number before the next session. Keep the sheet. The next session starts from this sheet, not from a feeling.
The mistake most people make here
The common mistake is to treat the checklist as a warm-up that can be skipped once the chart looks obvious. People then move the stop, add to a losing position, or take a third trade after two losses, and the day's cost stops matching the plan. Write the five items down before the session and read them again before every order. If an item cannot be filled in with a real number, the trade is not ready.Check yourself
One pip on one standard lot of EUR/USD is 10 units of the quote currency. If you trade 0.10 lots with a 20 pip stop, what is the loss in units of the quote currency before broker costs?
20 pips x 1 per pip = 20 units of the quote currency, which is ₱20 at the rate used here.
Using the same 0.10 lots and 20 pip stop, how many trades of that size fit inside a ₱200 daily risk limit?
₱200 divided by ₱20 = 10 trades, but the checklist sets a stop after two losing trades, so the limit is not the same as the number of trades allowed.
Questions that come up next
How do I write a rule that actually gets followed?
Write it as a sentence with a number in it. 'I risk ₱20 on 0.10 lots with a 20 pip stop' is a rule. 'I will be careful' is not. Put the number on the same paper as your checklist and read it before every order. A rule without a number cannot be checked, so it cannot be kept.
What goes on the paper before I open the chart?
Five items, each filled in with a real number. The direction you are looking for, the price where you enter, the price where you exit if wrong, the price where you exit if right, and the peso amount you accept losing. If any item has no number, the trade is not ready. The chart comes after the paper, not before.
What do I do during the session when the chart moves fast?
You do nothing that is not on the paper. The stop stays where it was placed. You do not add to a losing position. After two losing trades, the session ends. The chart will look obvious at some point, and that is exactly when the paper is read again. The routine is the same on a fast day and a slow day.
How do I review a session after it closes?
Read the checklist and mark each item as done or not done. Write the result of each trade in pesos, not in pips. If a rule was broken, write which one and what it cost. The review is short. Its purpose is to show whether the paper was followed, not whether the day made money.
Does the routine change when the spread widens?
The routine stays the same, but the numbers in it are recalculated. If the spread is 3 pips and your stop is 20 pips, your real risk is 23 pips. At 0.10 lots that is ₱23, not ₱20. The rule about the stop does not move. The number beside it does, and you write the new number before the order.
What if I break a rule once?
Write it down in the review and note the cost in pesos. One broken rule is information. The danger is treating it as a one-off and repeating it the next day. If the same rule breaks twice in a week, the rule or the position size is wrong for you. Change the number, not the rule.
The words used on this page
- routine
- The same short set of actions before, during and after every session. It does not change when the chart changes. Its purpose is to make the day's decisions before the day starts.
- checklist
- A written list of items, each with a real number beside it. You read it before every order. If an item cannot be filled in with a number, the trade is not ready.
- spread
- The gap between the price at which you can buy and the price at which you can sell. On EUR/USD it is often 1 pip or less, but it varies between brokers and widens when news is released.
- stop
- The price at which you close a losing trade. It is placed before the order, not after. Its distance from your entry, in pips, sets the money you risk.
- session
- One period of trading, from the moment you open the chart to the moment you close it and write the review. A session ends after two losing trades, whether or not the chart still looks good.
- review
- The short read-through after the session closes. You mark each checklist item as done or not done and write the result of each trade in pesos. It shows whether the paper was followed.
What to take away
- The routine is the same every day: a written list before the chart, a few rules during the session, a short review after it closes.
- A rule has a number in it. If an item on the checklist has no number, the trade is not ready.
- The stop is placed before the order, no trade is added to a losing position, and the session ends after two losing trades.
- The review records what was done and what it cost in pesos, not whether the day made money.