Educational use only — not investment advice. See full disclaimer in README.md.
This is the routine you run every trading day, in order. It exists so that when the market is open and your money is on the line, you are executing a process you designed when you were calm — not improvising. Most blow-ups happen because someone skipped step 0 (sizing) or step 5 (the checklist). Don’t.
The whole loop takes 10–20 minutes once it’s habit.
The master flow
┌─────────────────────────────────────────────┐
│ STEP 0 · PRE-MARKET HYGIENE (do once daily) │
│ Account value, buying power, open positions, │
│ today's events, current risk budget left │
└───────────────────────┬─────────────────────┘
│
┌───────────────────────▼─────────────────────┐
│ STEP 1 · ASSESS THE MARKET │
│ → 01-market-assessment.md │
│ Output: 3 TAGS │
│ [ Direction ] [ Volatility/IVR ] [ Catalyst ]│
└───────────────────────┬─────────────────────┘
│
┌───────────────────────▼─────────────────────┐
│ STEP 1B · PICK THE UNDERLYING │
│ → 07-opportunity-selection.md │
│ Rank watchlist → 1–3 names + a reason each │
│ (classify the name → ref-underlying-class…) │
└───────────────────────┬─────────────────────┘
│
┌───────────────────────▼─────────────────────┐
│ STEP 2 · SELECT CANDIDATE STRATEGIES │
│ → 02-strategy-selector.md │
│ Tags → matrix → short list (2–4 strategies) │
│ Filter by YOUR approval level (04-…) │
└───────────────────────┬─────────────────────┘
│
┌───────────────────────▼─────────────────────┐
│ STEP 3 · CONFIRM FIT & BUILD THE TRADE │
│ → open the strategy file │
│ Read "Use this when" → still fits? pick one. │
│ Choose expiry, strikes. │
└───────────────────────┬─────────────────────┘
│
┌───────────────────────▼─────────────────────┐
│ STEP 4 · SIZE THE POSITION │
│ → 03-risk-and-sizing.md │
│ Risk per trade ≤ your fixed %. Compute lots. │
│ Fits portfolio risk + Greeks limits? │
└───────────────────────┬─────────────────────┘
│
┌───────────────────────▼─────────────────────┐
│ STEP 4B · GRADE THE SETUP (0–100) │
│ → 08-scorecard.md │
│ Score ≥ 70 → proceed. < 70 → NO TRADE. │
└───────────────────────┬─────────────────────┘
│
┌───────────────────────▼─────────────────────┐
│ STEP 5 · PRE-FLIGHT CHECKLIST │
│ → 05-checklists.md + strategy Entry checklist│
│ ALL boxes ✓ → place limit order at mid │
│ ANY box ✗ → STAND DOWN. No trade. │
└───────────────────────┬─────────────────────┘
│
┌───────────────────────▼─────────────────────┐
│ STEP 6 · LOG IT & SET ALERTS │
│ → journal-and-review.md │
│ Record thesis, tags, size, plan. Set GTC │
│ profit-take order + price/-DTE alerts. │
└───────────────────────────────────────────────┘
THEN: manage open positions per ref-management-adjustments.md
WATCH: is the regime changing? → ref-regime-transitions.md
Step 0 · Pre-market hygiene (5 min, once)
Before you even look for a trade, take stock. You can’t size a trade or judge new risk without these numbers.
- [ ] Account value & net liquidity noted (today’s starting number).
- [ ] Buying power — both option BP and, if relevant, overnight BP. Naked/undefined strategies eat far more BP than defined-risk; know your ceiling.
- [ ] Open positions reviewed — for each: current P&L, DTE, is any short strike being tested, is anything at its profit target or ≤21 DTE? (These get managed first, before any new trade — see ref-management-adjustments.md.)
- [ ] Portfolio Greeks dashboard — roll up net beta-weighted delta, net vega, net theta/gamma and check them against your limits (ref-portfolio-greeks.md). A new trade that pushes any line past its limit doesn’t get placed.
- [ ] Today’s & this week’s events — earnings on anything you hold or watch, plus macro (FOMC, CPI, jobs report, PCE). Use an earnings/economic calendar (see ref-data-and-news-sources.md for where). Catalysts change everything (Step 1, Catalyst tag).
- [ ] Regime-transition watch — is volatility expanding/contracting, a range breaking, or risk-on flipping to risk-off? If a turn is underway, review the book before adding (ref-regime-transitions.md).
- [ ] Risk budget remaining — how much of your max-portfolio-risk is already committed? If you’re near the cap, today may be a no-new-trades day, and that’s fine.
- [ ] Your own state — bored, revenge-trading after a loss, FOMO, distracted? If yes, the correct position size is zero. The market is open every day; your capital is not infinite.
Manage before you build. Always handle existing positions (profit-takes, 21-DTE rolls, tested-side defense) before hunting new trades. Money already at risk outranks money you’re thinking about risking.
Step 1 · Assess the market → 3 tags
Go to 01-market-assessment.md and run it. You come out with three tags, e.g.:
Direction: Neutral-to-bullish · Volatility: High (IVR 62) · Catalyst: None this week
That triplet is the input to the selector. Write it down — it goes in your journal regardless of whether you trade.
Step 1B · Pick the underlying → 1–3 ranked names
Go to 07-opportunity-selection.md. Rank your watchlist by edge factors (IVR fit, relative strength, catalyst, setup, expected-move mispricing) and pass the liquidity gates. You come out with 1–3 candidate names, each with a one-line reason — and you must be able to say why this name instead of the index. Classify each name’s “personality” (ref-underlying-classification.md) so you size for its move, not SPY’s. If nothing earns its place, the index is the default — or it’s a no-trade day.
Step 2 · Select candidate strategies → short list
Go to 02-strategy-selector.md. Find your Direction row × Volatility column in the matrix. It gives you 2–4 candidate strategies. Cross off any your account can’t do (04-account-and-approval.md). You now have a short list.
If the matrix points to “no clean edge today” — that’s a valid, common, profitable outcome. Not trading is a position.
Step 3 · Confirm fit & build
Open the strategy file for each candidate, read its “Use this when” block, and confirm today’s tags genuinely match (the matrix is a filter, not a guarantee). Pick one. The underlying is already chosen (Step 1B); now choose:
- Expiry / DTE — per the strategy’s defaults (30–45 DTE selling, 45–90 DTE directional, etc.).
- Strikes — per the strategy’s delta/width rules.
Step 4 · Size it
Go to 03-risk-and-sizing.md. Compute the number of contracts so that max loss ≤ your fixed risk-per-trade (e.g., 1–2% of account for defined-risk; much tighter for undefined). Confirm it fits within your remaining portfolio risk budget, BP, and your portfolio Greeks limits (ref-portfolio-greeks.md). If the smallest viable size still exceeds your risk limit, the trade is too big for your account — pass.
Step 4B · Grade the setup (0–100) → go / no-go
Go to 08-scorecard.md and score the finished trade idea. It pulls together what Steps 1–4 produced into one objective number. ≥ 70 → proceed to pre-flight. < 70 → NO TRADE (log it anyway — your rejects are data). Any hard-floor failure (no nameable edge, liquidity fail, a limit breached) is an automatic no regardless of the total.
Step 5 · Pre-flight checklist → place or stand down
Go to 05-checklists.md, run the Universal Pre-Flight plus the strategy’s own Entry checklist. This is binary:
- All boxes ✓ → place a limit order, start at mid, work the price. Never market-order a spread.
- Any box ✗ → stand down. A failed checklist is not a “close enough.” It’s a no.
Step 6 · Log & set alerts
Go to journal-and-review.md and record the trade at entry (thesis, 3 tags, IVR, size, max risk, profit target, defense plan). Then:
- [ ] Place a GTC limit order to take profit at your target (e.g., 50% of credit) so you don’t have to babysit.
- [ ] Set alerts: underlying at your defense/stop price, and a calendar reminder at 21 DTE.
- [ ] Note the planned management triggers so future-you knows exactly what to do without re-deciding.
The “should I even trade today?” gate
Run this before anything. If you can’t answer yes to all, it’s a no-trade day — and most days should be:
- [ ] Do I have a clear read on at least one of {direction, volatility regime}?
- [ ] Does the selector point to a strategy my account can actually execute?
- [ ] Is there a liquid underlying that fits, with tight markets?
- [ ] Do I have risk budget left, and am I in a calm, rule-following state of mind?
- [ ] Can I state my thesis, my profit target, and my exit-if-wrong in one sentence each before entering?
The professional edge is not taking more trades. It’s taking only the trades that fit, sized right, managed by rule — and being completely comfortable doing nothing on the other days.
Next: 01-market-assessment.md to learn how to produce the three tags.
Power and Pelf 