Preparing for the Trading Day With a Solid Morning Routine

Preparing for the Trading Day With a Solid Morning Routine

History is full of examples of great men and women who credit their daily success to a morning ritual. So it should be no surprise that applying this principle to your trading makes perfect sense.

Creating a daily trading routine for your market preparation, and associated tasks, allows you to run through these steps quickly and efficiently. A morning routine is beneficial not only for handling the mechanics of the market, but also for preparing for the mental game of trading.

Creating a Positive Mindset

Libraries of books have been written describing the many ways that successful trading depends on mental preparation, yet too many traders, especially younger traders, don’t pay enough attention to this aspect of the trading day. That’s why the most important thing you can do in the morning before you start trading is get your head in the right place. This starts with a routine unrelated to the financial markets.

Your mom might have told you that every day should start with a good breakfast, and she was right. It should also include some exercise and, yes, a bit of meditation, or simply “quiet time,” if the thought of meditation spooks you.

The order in which these things are done can vary depending on your personal preference, but my suggestion is to exercise first. In most cases you can do this while catching up on overnight news that might affect the market.

Next, eat breakfast, but a utilitarian one. Steve Jobs was famous for wearing the same outfit every day so that he didn’t waste time picking out his clothes. Have a simple, fixed breakfast during the week. Mine is oatmeal, frozen blueberries, a glass of OJ, and a cup of tea. Save the complex dishes like galette complete or red velvet pancakes for the weekend.

Finally, take 15 minutes to meditate. Don’t think about the market or what stocks you’ll trade during this time. Just relax in a quiet, preferably dark space, focus on your breathing, and clear your mind.

Preparing for the Opening Bell

Now that your head is in a good place, and your heart is calm, the first thing you want to do is look at the futures. You may have gotten some sense of the market’s tone from the overnight news, but futures like the S&P 500 E-mini (/ES) can give you an indication of how the news is being discounted by the markets.

If you already have trade ideas, long or short, make sure that the overall direction of the futures supports your thesis. If not, now might be the time to revise by running scans on pre-market movers. Identify potential candidates that fit your trading strategy.

Once you have these candidates, set trade alerts a few pennies from your buy or sell points so that you don’t have to spend all your time watching them during the day.

Next, take time to review your buying power, account balance, and most importantly, open positions. Make sure you have any orders in place that are needed to manage these positions. This is a crucial step that many traders omit, but there’s nothing potentially more damaging to your P&L than thinking you have a live stop-loss in place when in fact it has expired.

The amount of time you’ll need to complete your morning ritual depends on what components you add to it and how much you internalize it, but it doesn’t need to be overly complex to be effective. And if you practice it on a regular basis, you’ll find that it will become an important, and even enjoyable, part of a successful trading day.

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