Doing a pre-market trade plan is a critical step toward setting yourself up for a successful trading session. I try to have myself set up as follows for when the regular trading hours begin:
For starters, I like to have a nice, quiet, as secluded space as possible for my desk to be set up at. I want as little disturbance and distraction as possible.
Before I do anything, I check my equipment. I make sure all my virus scans have run so it won’t interrupt my trading and I also make sure my updates have completed as well. There is nothing worse than being in a trade, and the old Microsoft update wants to restart your PC.
Next, and this is important, I run a speed test through www.speedtest.net. Your results will vary according to your ISP and location, but from the Houston area, I like to see a ping speed no higher than 42 milliseconds from here to Chicago. Ping speed is how long it takes your command to go from your location to its destination then back to your PC. If it is excessive, there may be a problem with your connection or even your ISP and equipment.
I like to pick out significant points of support and resistance the evening prior; I check this when I first set up to make sure nothing has changed, and frequently, you may find that it has. I adjust accordingly.
Although I do not trade the news, I like to know when it is to avoid being trapped in a trade and getting stopped out. I get my essential news events from this Economic Calendar as my source for trading news events.
Check your account as well. I use an online trade journal to track my trades. But, I like to hand write the previous balance before I get started.
The real difference for pre-market trading, in my opinion, is that you MUST HAVE a broker that can accommodate you in the early morning hours. You need a broker that can be responsive to your needs during this time; maybe not so much a broker, but access to a trading desk. If your internet flops and you are flying blind, you need to be able to pick up the phone, call the trading desk, and get out of that trade. Not all futures brokers can do this, so please do your homework on what your online broker has to offer before ever trading the pre-markets.
Have a cell phone with you at all times and be sure to either know or have your account number written down. In the past, I have been real big on redundancy (alternate internet), but I have found that calling your trade desk is much faster than switching your internet during an outage.
Did you get enough sleep? Have you had your coffee? Are you mentally ready to participate in the markets? I must be showered, shaved, and prepared before I trade; I want to make sure I have “my game face on” before ever even thinking about placing an order.
Use a trade journal for taking notes and logging your trades! Some people prefer old school paper and pen, But, either way, be ready to record what you do.
As you can see, having a well thought out trade plan comes down to the “5 P’s” (prior preparation promotes peak performance).
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