Speak to any professional trader worth their salt, and they’ll all tell you the same thing – the pre-market routine is all-important. Top day traders at investment banks usually get up a few hours before the market opens to research the market, identify opportunities, and determine factors that could influence the market that day.
This dedication to pre-trading research is what gives the best traders their edge, but many amateur traders foolishly ignore this step and dive straight into the markets without doing their homework first. Basically, if you don’t do your homework, expect a lot of unwelcome surprises when the market doesn’t behave how you expect it to.
But what might an ideal forex pre-market trading routine entail? Well, before you get stuck in, you should make sure that you have first accomplished the following steps:
Reviewing any positions that are still open and making the relevant adjustments
Reviewing your trades from the previous session
Getting yourself “up to speed” on the market
Checking for any upcoming news that could cause volatility
Making yourself ready to trade before the session you are trading is going to open
Probably the most important of these steps is to review the relevant market news. Your first port of call should be the market previews on financial sites such as Reuters and Bloomberg, as well as dedicated forex sites such as Traders DNA, ForexCrunch, and FreshPips. It might also be worth checking television channels such as CNBC, Bloomberg TV, and the BBC for updates on potentially market-moving events and breaking news.
Once you have a broad outlook for the trading day, you can get into the nitty gritty of reviewing yesterday’s trades and how the previous trading session finished, and perhaps identify key market areas like support and resistance. Once this process has been satisfactorily completed, you should be ready to start trading your system.
A good pre-market routine is the key to trading success. It will help you to plan your day out so that you are not spending valuable time during market hours trying to figure out the news or data that will be coming out, and it will better inform you in the event that the market does something unexpected.
As well as being essential groundwork for your trading activity, a pre-market routine can help you to relax and be prepared for whatever the market does to you that day. Ultimately, if you have up-to-date knowledge of the technical and fundamental factors that are affecting the market, you will be in a much better position to profit from it.