Risk Management

Reversal Trade Pre-Entry Checklist

Check off six conditions this site's own tools already grade one at a time: exhaustion, reversal bar pattern, momentum divergence, volume climax, level quality, and stop size. Get a live score and a Strong Setup, Marginal, or No Trade verdict before you fade the move.

Jason Parker, founder of Reversals Trading

“Six boxes, one verdict. Check them before you fade the move, not after you're already in it.”

Jason Parker, founder, Reversals Trading

The move being faded is extended: at least 2x the recent average true range in one leg, or 3 or more consecutive same-direction bars. 2 pts A recognized reversal bar sits at the extreme: hammer, shooting star, engulfing, doji, or tweezer. 2 pts RSI or stochastic diverges against price at the extreme: a lower high while price prints a new high, or a higher low while price prints a new low. 2 pts Volume on the extreme bar or the bar before it runs 1.5x or more above the 20-period average, the standard climax-volume read. 2 pts The level being faded is a genuine structure level: a prior swing high or low, a round number, or the prior day's high or low, not an arbitrary price. 1 pt Your stop, placed beyond the extreme bar's wick, keeps this trade at 2R or less at your standard position size. 1 pt

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Check the boxes that apply.

Educational tool only, not financial advice. A high score describes textbook reversal conditions. It does not guarantee the trade works. Confirm every signal against your own plan and risk rules before you trade it.