10 Questions to Answer Before The Market Opens | Bulls on Wall Street

10 Questions to Answer Before The Market Opens

All success in trading comes from what you do when the market is closed.

You see great traders crush the market open and be done in 10 minutes. But what you don’t see is all the hours of prep that went into dominating those 10 minutes:

Trading is a game of routines and preparation. Make sure you have these questions answered before the bell rings:

Have You Built a Watch List?

If you don’t have a watch list and trading game plan before the market opens, don’t bother showing up. Don’t come with a watch list of 50-100 stocks. Keep a primary and secondary watch list, and rank each stock by the quality of the setup. Make your primary watch list 5-10 stocks, and keep other opportunities on your radar. You won’t be able to nail every move on any given trading day. But make sure you do nail the best ones.

Have You Researched Each Stock?

It’s one thing to put a stock on a watch list. It’s another to know WHY it’s there. Don’t add a stock just because Kunal or someone else on Twitter posted about it. Study it, form a thesis, and wait for a high probability setup.

Have You Looked at Multiple Time Frames?

If you are looking at day trading at the market open, it is essential to have an understanding of the bigger picture trend of the stock. Many traders make the mistake of longing a stock gapping up right into resistance on the daily chart, and then get smoked. Always pay attention and give the most weight to trends on the daily, weekly, monthly charts.

Do You Know Why It’s Moving?

Everyone loves a good chase. You see a stock up during pre-market. But do you know WHY it’s up? Is it fluffed up, rehashed old press release? Or is it a legitimate catalyst that has a reason for a change in demand? Don’t trade any stock once the bells ring that you don’t know the catalyst for. Always know the why.

Are You Mentally Prepared?

You can have a great watch list and analysis done, but if you cannot execute what’s the point? If you have distractions going at work or your personal life, don’t bring them to the market with you. If you do have distractions and your head is not in the game, take the day off from trading. Save yourself the money.

Is This a Setup You Have Edge With?

When you add stocks to your watch list, look at the setup you are looking at taking. Your watch list should not have stocks and setups you don’t have any statistics on. Journaling will tell you before every trade whether you are making a trade or playing slots at a casino.

How Much Are You Willing to Risk?

As you build your watch list, define the quality of the setup. This will allow you to figure out how much you should risk on it. If it’s one of your go-to’s, go full-risk. If it’s no A+, go ½ or ¼ risk, or even avoid altogether. Use this formula to determine your position size:

What Will You Do in the Neutral Case Scenario?

What will you do if the stock open’s flat and chops around?

What Will You Do in the Bearish Case Scenario?

What will you do if the stock opens week?

What Will You Do in the Bullish Case Scenario?

What will you do if the stock opens strong?

Summary

The market open is one of the best times to make a lot of money in a short period of time. It is also one of the easiest times to lose a lot of money in a short period of time. Create a successful routine for yourself so that you are at peak performance at the market open. Once you have this routine, success will be muscle memory!

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