The Importance of Pre-Market Preparation
Success in day trading hinges on hitting the ground running when the market opens. Time spent familiarizing yourself with overnight events during market hours is lost opportunity. By the time you’re updated, your desired entry point might be gone. This applies to Forex despite its 24/5 nature. While Forex trades around the clock, activity peaks during specific currency’s local market hours (Asia, London, New York).
Laying the Groundwork: Health and Timing
Prioritize a good night’s sleep and a healthy breakfast. This ensures focus and prevents distractions, avoiding impulsive trades. Determine how much time before the market opens you need to prepare, typically around 75 minutes, though this varies.
Reviewing and Assessing the Landscape
Begin by checking your existing positions (less relevant for typical day traders, but still worth a glance). Analyze the charts you follow. In Forex, look for any unusual overnight activity. For stocks, review futures and after-hours markets for insights into overnight trends.
Information Gathering: Stay Informed
This stage is about collecting crucial information to inform your trading decisions:
- Market Analysis: General and market-specific analyses.
- Overseas Indices: Gauge the sentiment for your local market’s opening.
- Sentiment Indicators: E-Mini, VIX, or others.
- Market Calendar: Note upcoming news events.
- Overseas News: Identify markets with potential activity or opportunities.
- Earnings Releases: Assess individual stocks and potentially sector impacts.
- Relevant News: Weather (for commodities), political events (for specific regions), etc.
- Technical Indicators/Analysis: Review key signals.
- Trade Recommendations: Explore suggestions.
Planning and Strategy: Ready to Execute
After gathering information, prepare your day. This might involve setting pending orders, updating trading spreadsheets, or refining your trade watch list. Pre-plan as many trades as possible to allow for thoughtful execution during market hours.
We hope you have enjoyed this article, for more articles like this, tips for improving your trading, be sure to check our education articles.
Want to trade forex? Here’s a list of forex brokers to check out plus analysis and predictions for major currencies.