5 Things To Do Pre Market That Will Improve Your Performance
“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.”
― Abraham Lincoln
We all know that proper preparation is the key to success. We know that the elite of the elite in any field are successful because of their work ethic. We as traders are no different. Our job requires us to continually study, revise, scheme and prepare for a multitude of un announced scenarios. However, our glory will not be measured by hard work alone . We need to know how and what to prepare for. Below are 5 quick things to do each morning that will improve your trading performance.
Your premarket starts the night before. The easiest way to lineup a highly successful day is by doing as much homework after the market closes each day as possible. This serves two functions. Number one the action, market sentiment and momentum stocks are still fresh in your mind. Most likely these stocks will be in play numerous days in a row and this is a great place to build a group of stocks to begin your day with. The second function is having a group of go to stocks to focus on in the morning will eliminate anxiety and confusion. This is especially valuable for newer traders who find themselves unable to execute or “pull the trigger” when duty calls.
Scan the pre market gainers and losers list. You’ll find that the stocks that will provide you with the most opportunity will be the stocks that have the most action and volume pre market. These could be earnings movers, PR reports, catalyst events etc. These stocks will attract the most players for the day thus providing you the best opportunity for success. This is also a very easy list to find. Most brokerage accounts offer this as a standard feature with their software. If not, there are many websites such as Yahoo finance and Finviz.com that post this information.
Organize your stocks in specific watch lists. Over time as a stock trader you’ll learn that stocks act a certain way based on a certain event. For example, gap up and gap down stocks act and move differently than PR stocks . Not only do these stocks move differently but they tend to make their larger moves at different times of the day. Organizing your watchlists in specific groups will provide you with seamless scanning of opportunities and will streamline your decision-making process.
Keep your stock list and focus small. As traders we have a habit of focusing on all the stocks and opportunities we missed throughout the day rather than the ones that are right in front of us. There are probably more than 3000 different stocks being traded at any given time. You won’t be able to trade them all and you cannot watch them all. Keep your attention and focus on only a hand full of stocks that meet your trading criteria. Allowing maximum focus and attention on a smaller group of stocks rather than half attention on a larger group of stocks will not only make you more money but keep you from burning yourself out as well.
Relax. If you miss a trading opportunity in the morning, don’t see any of your top-tier setups or don’t get off to the start that you desired, don’t give up. The market is open for 6 1/2 hours and there will be plenty of other opportunities available to you. Although it is very important to get off to a good start as this sets the tone for a positive day, it’s more important to finish strong. As the saying goes it’s not how you start it’s how you finish
Remember many of the problems that plague failing traders, anxiety, sabotage, deer in the headlight syndrome and panic derive from a lack of preparation. Although in this post we covered only pre market preparation this is just a small fraction of the what it takes to be a successful trader. To build yourself into a great trader take a free 14 day trial to our live televised trade room
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Doug