Everything starts off at the foundation. If you have a disorganized morning, you will have a disorganized day. If you wake up in these types of market conditions without a routine, you might as well just head to the casino.
A lot of traders just wake up, turn on their software programs, and start chasing stocks. The majority of those people are missing key details in the market that could save them from bad trades or place them in solid trades.
If you really want to become an elite trader day in and day out, you need to have a proper trading morning routine and process. There are no successful traders who just wing it.
Today, we are going to highlight some key points in this video Kunal filmed with B the Trader a little while back that covers the top things he does every single morning to make sure he is prepared for the bell.
Look at the Market in a Macro Context
Too many traders focus on the micro. They don’t start out their day by looking at what the overall market is doing. Start out by analyzing the major market indices. Look at $SPY, $QQQ, $USO (oil), $IWM (small caps), and any other major indices that are relevant to the markets you trade.
By doing so, you will find correlations in the market you will want to know, key levels on major indices that could cause upwards or downwards moves, and can spot what trend the market is currently in. Your game plan will change whether it is bearish, bullish, or within a consolidation zone, so knowing the current nature of these major maco indices is key.
Look at the Big Names
After looking at the macro indices, it is time to get a little more granular. Look at some of the big names in the market like $AAPL, $AMZN, $NFLX, and $GOOGL that have major influence on the market indices you just looked through. See what levels they are at, what trends they are in, and if they are conforming to their respective indices or not. Also, see if there are opportunities to play them soon or not.
Look at Breaking News or Upcoming Events
This is pretty self-explanatory, but taking a few minutes to look at the key headlines of the day, or upcoming macro-economical news announcements will help you stay on top of things and know what exactly is driving the market’s direction in the coming sessions. Don’t trade stocks without understanding the news that’s moving them.
Look at Gappers
A lot of people skip the prior steps and jump right to here, but you need to do the prior 3 steps before this in order. Now, looking at gappers is simply looking for what could be in play today. At BOWS, we focus on large and mid caps, so we look for stocks that are up 3% or more on the day and have traded over 50k shares pre-market.
After you get those scan results, you should go right to their daily charts first. Look at what ‘room’ they have to run, where the supply and demand zones are, and how you can potentially play them.
In the video above Kunal uncovers a little more about what he looks for in Gapping stocks every day, so make sure to check that out!
Look Through a Custom List of Stocks
Finally, it is good to look through your own custom list of stocks. Look through the best stocks you have traded over the last year, high average true range stocks, or just whatever list best suits your style. Don’t think too hard about this step, just scan around before the bell, and make sure you have your plans in place!
If you need more help building a winning morning trading plan to find profitability, make sure to enroll in our next Live Trading Boot Camp before space fills up!
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