The 12 checks
Work through these checks before placing an order with your broker. A check may reveal a reason to revise your plan or gather more information; completing the list does not make a trade safe.
1. Write down your thesis
In one or two sentences, record why you are considering the stock and what would make you reconsider. Separate facts you can verify from assumptions about the future. A written thesis gives you something specific to review later, rather than a reason reconstructed after the outcome is known.
2. Choose your order type
Decide whether a market, limit or other order type available at your broker fits your priorities. A market order prioritizes execution but does not guarantee a price. A limit buy order sets the highest price you will pay, but may not fill. Check your broker's order terms, including when the order expires.
3. Check the bid-ask spread
The bid is what buyers currently offer; the ask is what sellers request. Their difference is the quoted spread. If the bid is US$49.95 and the ask is US$50.05, the spread is US$0.10 per share, or 0.20% of the US$50.00 midpoint. A displayed quote can change, and a larger order may fill at multiple prices.
4. Compare order size with daily volume
Divide your share quantity by typical daily share volume. A hypothetical 2,000-share order against 200,000 shares traded per day is 1% of daily volume. This participation rate is a scale check, not a prediction of your fill: volume varies during the day, and not all displayed liquidity is available at your price.
5. Set position size from your risk limit
Decide how much of your portfolio you are prepared to expose to this position. If you use a price-based exit, one sizing calculation is shares = maximum planned loss in US$ ÷ (entry price − planned exit price). For example, US$200 ÷ (US$50 − US$48) = 100 shares, before costs. This is a planning calculation, not a loss cap: a gap, slippage or failed exit can produce a larger loss.
6. Define your exit plan
Write down what would cause you to close or reassess the position, and when you will review that decision. A planned exit price is not a guaranteed execution price; even an order intended to limit losses can fill differently under fast-moving market conditions. Include what you would do if your original thesis no longer holds.
7. Review volatility and upcoming events
Check how much the stock has recently moved and whether an earnings release or other known event falls within your intended holding period. Historical volatility describes past price variation, not the largest possible future move. Event timing can make yesterday's trading conditions a poor guide to tomorrow's.
8. Measure concentration after the trade
Calculate the stock's post-trade weight: position value ÷ total portfolio value. Also consider whether the purchase increases exposure to a sector, country or region already prominent in your portfolio. Several different stocks can still respond to the same underlying risk.
9. Check currency exposure
If the stock trades in a currency different from the one you use to measure your portfolio, note the exchange rate and any conversion costs. A change in that rate can affect your return in your home currency even if the stock's local-currency price does not change. Check whether you already have substantial exposure to that currency.
10. Estimate total trading cost
Include the spread, possible market impact, broker charges and, where relevant, currency-conversion charges. Spread and impact are estimates until you have an actual fill. For a hypothetical 100-share purchase, an estimated US$0.05 per-share spread component and US$0.03 per-share impact component add up to US$8 before other charges; avoid adding a full quoted spread if your cost estimate already uses half the spread.
11. Read recent news
Look for company announcements and other recent developments that could change the facts behind your thesis or the conditions for execution. Check dates and original sources where possible. News can provide context without establishing what the price will do next.
12. Log what happened
After the decision, record whether you placed the order, the quantity filled, the actual fill price and any departure from your plan. Record a skipped trade too. Comparing your plan with what happened helps you identify differences between estimated and realized execution costs without treating a single outcome as proof that the decision was right or wrong.
What PreTrAIde can check—and what remains yours
PreTrAIde is pre-trade analysis software, not a broker or investment adviser. You build a basket with each stock's buy or sell side, quantity and execution conditions; its PreTrade analysis runs before you place any order. It returns a GO, NO-GO or MODIFY verdict for the basket and each line, alongside a model-estimated success probability, risk assessment, suggested execution strategy and plain-language reasoning. These verdicts support a decision; they are not recommendations. The probability is bounded between 5% and 95% and is neither a guarantee nor a forecast of returns.
Its quantitative checks estimate spread, participation in daily volume, market impact and daily volatility. They also assess liquidity, data quality and portfolio concentration, including breakdowns by country, sector, region and currency. Recent news and analyst ratings inform its AI analysis. This covers much of checks 3, 4, 7, 8, 9, 10 and 11, but estimates cannot substitute for current broker quotes, fees, event verification or your own judgment.
You remain responsible for your thesis, risk limit, order type and exit plan. PreTrAIde never receives, transmits or executes an order: you place trades yourself with your broker. After a verdict, you can log whether you executed, partially executed or skipped the trade and record real fill prices. PreTrAIde can then measure outcomes from market data for your account memory; logging does not turn a past outcome into a prediction.