I'm working on developing a consistent approach to creating my morning game plan. The purpose of this thread is to discuss the pros and cons of having a plan for the morning, a plan for the day, etc. This is not to be confused with a "trading plan" or a set of rules, strategies, indicators, etc - I'd like this discussion to focus on a trade plan for the day or part of the day.
Currently I spend some time pre-market working out the context of the instrument I'm trading. I review longer timeframe charts, some volume profile information, recent support/resistance, recent daily range data, etc. I then create a plan for the Open and a plan for the day. I know that some traders do not want any kind of pre-conceived notions about what the day will do - they want to start with a completely clean slate and an open mind. I recognize that creating a plan for the day or morning carries the danger of getting locked into a fixed view of what is possible and I make this mistake with some frequency in my trading.
What I try to do right now is formulate a plan for the open - what will I do if price goes up right away, down right away, or sideways? Where are the levels close to the opening price that are important and what will I look for at those levels based on the context. I then formulate a plan for the day such as whether I am bullish or bearish overall and where I might try to get into a long trade or a short trade. I find that by having a plan for the open it keeps me from making impulsive trades. By having a plan for the day I find that I am more likely to have conviction when I do get a trade setup that coincides with my views on the market.
I find that the cons of this exercise are that I can sometimes get too attached to my view and not be as open to the market's every changing structure and context. I can sometimes ignore signs that a given move is building or taking place because I get too rigid in my thinking.
I'm curious what others use in their trading in terms of a plan for the open, a plan for the day, or other views on this subject such as not wanting to have a pre-market plan at all.
Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
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I would suggest being sure you are well prepared to focus.
You've already eaten, showered, walked the dogs, taken kids to school, etc.
Turn off the TV, and focus on your charts. No phone calls.
You don't have to maintain the above posture for 8 hours, but just as long as you are trading which may be only 2 hours for instance.
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I usually on the night before or even days ahead of time pick areas I want to trade off...sometimes just figure tomorrows/future stuff during the current day.
The point is your watching this stuff all day so when nothing is going on figure where the good spots are.
Unlike Mike, I do watch tv but not cnbc....I watch other stuff....I don't want some talking head moron messing with my mind.
Perhaps if you don't have a lot of experience you should do as Mike suggests so you don't get distracted.
I do agree with getting rid of the phone or turning it off.....that really makes you lose focus.
That's pretty much it...I get to the computer about an hour before the market opens so I have time to be fully awake when the action starts.
I have no real bias generally...doesn't matter because I have picked numerous spots above and below wherever price is and just wait.
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I agree that by having a plan, there could be a danger of getting locked into a fixed view. But for me, having a plan prior to the market open works out better. Otherwise I am not able to put the price moves in their proper context.
For a particular trading instrument that I trade, I prefer to do proper homework in the evening itself, so that I am well prepared before the market open.
I usually start with looking at the Higher Time Frame Chart like Daily and Weekly, to see where the price is currently in terms of the larger timeframe VALUE / auction rotation process.
If it is in Balance or if it is in between an Imbalanced Move right now.
Then I mark the Brackets and then mark the various Important Reference Points which might come into play for tomorrow's market action.
Probable scenarios could also be anticipated at this time itself. Like if the price opens here and behaves like that, then I would do this.. at this level.. etc.
Then in the morning, I notice the following -
Where does the price opens - In relation to yesterday Close, POC, Range etc.
Is there gap up / gap down ?
After around 30 minutes of price action, I try to gauge -
What kind of an Open is this ?
What is it telling me about the State of the Market ?
What kind of Bias is it showing ? Bullish / Bearish / Neutral ?
What is the state of the Overall Market, ex. the major Indices etc.
Depending on all these factors one could decide, what makes more sense. To look for "Reversion to the Mean" type of setups or to go with the Breakout type of setups.
It will also depend a lot on the Strength of the Support / Resistance Levels around which the price is currently trading.
I do not watch tv. But do some internet surfing and checkout the major news announcements etc. which could have direct impact on the trading instrument. Otherwise I might get off guard when the price makes a big move based on some Important Number Announcement etc. I try to get completely ready at least 30 minutes prior to market open, so that my mind can focus on the market action completely.
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