One of the first things every trader does before the market opens is spend time completing a pre-checklist.
This is important because anything can impact the market. After all it is a global market.
So, I have compiled a list of the most common items I've seen:
Check The Volume
- Volume tells you a lot about the current state of the market.
- You don't have to base your decision completely on your volume analysis, but understand if it providing support or going against the current market direction.
- Apply a moving average on your volume to help you identify high and low volume market sectors.
Check Index Futures
- Look at all the markets and check the highs and lows for NASDAQ 100, S&P 500, and Russell 2000 Index Futures, early because these create your support and resistance for your day.
Read News Articles
- Read stories from networks such as Bloomberg or Forbes that impacted global markets while you were asleep and how that will impact the US.
- There are several more specific things to do based on the market you're trying to trade in.
- The key here is to stay current with what is happening in the world.
See What Other Traders Are Up To
- You're able to search pre-market securities since they are public. Go look at the volume and see where your friends are putting their money
- Look for open positions, and look for easy money like seeing stock's reporting earnings. If you see one that looks good buy it early and ride the wave for a bit.
- Look at the support and resistance levels. You don't have to use them, but it can help predict where your competition will become interested.
Take Note of Key Levels
- Make sure you have the right instruments to record key numbers and open positions.
- Seeing the numbers is important so you don't lose focus during market hours and put yourself in a bad position.
Find Safe Exits
- Lets say you've done you're pre-market research and see that your holding Delta and they just kicked another person off a plane. Don't be afraid to exit your position at the opening bell just because you're already at a loss.
- Remember you don't have to be right all the time to be successful, you just have to be right more than you're wrong.
Think about the Seasons
- Think about the day of the week, time of the month, month of the quarter and period of the year.
- All of these can tell you what the price will do and how it will favor different markets.
Place Crazy High and Low Limit Orders
- This is something you do while you watch the pre-market. Place these really high sells or really low buys on stocks or securities.
- There could be some you want to own but are too expensive at the moment. Somethings quick dips can get your order filled.
Be the Bear or Bull
- Choose who you want to be in the morning. Are you feeling aggressive or do you want to play defense? Make this choice based on your pre-market research.
- You can always change after lunch.
Early Bird Gets The Worm
- Go ahead and create a list of plays the will increase momentum, then just sit back and traders get confused and end up on the losing side.
- Then look for low entries.
Just Being Honest
- What you do in your pre-market routine determines how well the rest of your day goes. This list will help you get up to speed faster and ahead of the opening bell.