Daily routine Pre-Market analysis

Many Traders wander aimlessly through their trading day, taking new trade positions on the fly, just because it “feels right”, especially in the excitement of the moment when the price is moving without them.

It can be a costly habit, entering a trading day being unprepared for what lies ahead, without a Trading Plan or even a Traders Daily Routine checklist. When you consider that professional traders prepare for 2 or 3 hours before the markets opening bell, it shows how serious they value their work and money.

Good trading habits can only be formed by repeating a good preparation routine. Only when the routine is carried out consistently, you can expect consistent trading success.

The time before the market opens is crucial for getting an overall feel for the day’s market, finding potential trades, creating a daily watch list and, finally, checking up on existing positions. Here is a summary of how to  prepare Daily  Pre-Market:

•     Journal – Self Analysis before trading
•     Evaluate the Market Trend (bullish/bearish trends on multiple time-frames)
•     Overall Market Sentiment (bullish/bearish sentiment, key economic reports, inflation, currency,  etc.)
•     Open Positions Review (news, earnings, etc.)

Find Potential Trades

Next, the trader will scan for potential trades for the day. So whether your Trade Entry Method is through Fundamental Analysis, Technical Analysis, or a combination of both, it is key that you follow your trading plan.

Know what the Trade Entry Method 
is that you are looking for, list of opportunities, entry limit prices, profit target prices and stop-loss prices for the day.A few basic filtering methods that could be used are :

•     price action
•     candlestick patterns
•     Support & Resistance
•     Compare the next smallest Time-frame chart

So there are other criteria you can filter with to ensure you are also in tune with what the Market is telling you, and also being disciplined to follow your Trade Money Management Rules in your Written Trading Plan. Some examples of these are:

•     Being in tune with the Market Trend
•     Being in tune with the Market Sentiment
•     Following your Money Management Rules

The Bottom Line

Looking at the daily routine of the typical trader, it is evident that the pre-market routine is paramount to successful trading. This is the time when trading opportunities are located and the day is planned. Market hours are simply a time of entering and exiting positions, not devising any new plans. And finally, after hours is just a time to review the trades for the day and assess performance. Adopting a daily trading routine such as this one can help you improve your trading and ultimately beat market returns. It just takes some good resources and proper planning and preparation.