Building the Perfect Pre-Market Ritual

  • Do you notice yourself feeling anxious before the opening bell?morning_routine2
  • Do you find yourself feeling rushed into your first trades of the day?
  • Are you often ill prepared for the morning session?
  • Do you consistently lose money in the first 30 mins. of your trading session?
  • Does your trading morning feel like a whirlwind?
  • Do you often lose track of time and wonder where the morning session has gone?

If you answered yes to any of those questions and consistently experience these negative scenarios then I recommend that you spend some time looking into how you are structuring your pre-market routine.

The genesis of this post came after reading the morning routines of some of the world’s most prolific and influential artists and thinkers in the book –  Daily Rituals: How Artists Work – that I wanted to spend some time discussing the importance of the morning routine and documenting and sharing my own morning ritual.

For many years my own pre-market routine was anything but consistent.  And even though I knew implicitly that hopping out of bed 5 minutes before the opening bell and rushing to put on a trade wasn’t a good idea – for a while I did it anyway.

It wasn’t until I began to structure and incorporate the following practices, like a true professional, did my trading results, and more importantly trading psyche turn around.

Over the years of analyzing and tinkering with the different elements of my trading day I now consider my pre-market morning routine the most important time of my trading day.  And even though my actual trading usually is all done within a 2-2.5 hour window, the pre-market routine is perhaps the most influential part of the trading day and you should consider making it yours as well.

What is the launch sequence each morning that will make you the most effective?launch

Borrowing from a concept that Tim Ferriss is fond of advocating, ask yourself first and foremost what is the launch sequence each morning that will make you the most effective and focused for the upcoming trading session?

The second next very crucial step is having a ritual for the first hour of your day.

Ultimately your exact pre-market routine is something you must script for yourself but let me share what puts me into the optimum trading state.

As a household with a 3 year old boy I usually start my day between 645-715am EST.  Preparing for the trading day actually doesn’t start until the little one is fed, happy, and off to school.  So the order of some of the steps I detail below may shuffle around based upon having a 3 year running around the house but let me run through my typical checklist of preparation steps.

To get the best out of my trading day I’ve come to the realization that you need to focus on 3 main areas

  1. your physical well being,
  2. your psychological state,
  3. and finally the market conditions.

1.  Physical

What do you do in your morning routine to prepare your body?  Even though most of us sit behind trading desks, priming and readying our bodies is no less important than an elite athlete warming up before an important game.

a.  Incorporate Heart Rate Variability (HRV) training or Meditationinner_balance

Personally I typically will begin with 5-10 minutes of HRV training with the trusty Inner Balance app.

I’ve posted an article before on HRV training, Can HRV Training Strengthen Your Trading?, where I go into more detail on the benefits and details around HRV and “coherence” training.

“Personal coherence, also known as psychophysiological coherence, refers to the synchronization of our physical, mental and emotional systems. It can be measured by our heart-rhythm patterns: The more balanced and smooth they are, the more in sync, or coherent, we are. Stress levels recede, energy levels increase and our brain and what HeartMath calls the “heart brain” are working together. It is a state of optimal clarity, perception and performance.” – HeartMath

For those who are familiar with the Inner Balance app, I have it set at the highest difficulty level and depending how I feel I will aim for 5-10 mins training or 500 pts.

At the same time I’ll strap on my Viiiiva bluetooth heart rate monitor and use the SweatBeatLife app to check my HRV.  I generally like to do high intensity training in the early afternoon so measuring my HRV let’s me assess where I am on the spectrum of being fully recovered or overtrained.

The process of tracking my HRV and training my coherence calms my mind and reduces the pre-performance jitters.  Also having that feeling of being centered first thing in the morning gives me the ability to call upon it again it times of increased stress.

b.  Perform some light exercise or stretching.

I am not an advocate of high intensity exercise training, or any exercise that may excessively raise cortisol levels before the trading day.upgraded coffee

Consider installing a pull-up bar, doing pushups, squats, or yoga.  All of these exercises or stretches will promote movement and blood circulation and shake off any cobwebs your may have.

c.  Lastly fuel your body.

Choose a breakfast that will give you energy but not leave you sluggish or on a sugar high rollercoaster ride.

Personally I enjoy a BulletProof Coffee (BPC) each morning or a BP inspired coffee.

BPC  = Upgraded coffee beans, 2 tbsps of grass-fed butter, 2 tbsps of MCT oil, and stevia.

BP inspired coffee = Upgraded coffee beans, with coconut cream instead of the butter, MCT oil, stevia, and sometimes with grass-fed whey protein powder.

The BPC coffee leaves me focus, energized, and satiated until lunch.

2.  Mental / Psychological

What are you doing to ground your mind and center yourself for the upcoming session?mindthegap

The following is a checklist of questions I will ask myself before the trading day which I write down in a journal.

a.  How do you feel today?

b.  Does my mental assessment matchup with the HRV assessment?

c.  On this spectrum, Gratitude being the highest level and Fear being the lowest level, where are you trading from?

  • Gratitude
  • Joy
  • Anger
  • Fear

It is so easy to get into a trading rut because we take our circumstances for granted.  So each day I like to remind myself of the absolute gift it is to have the opportunity to trade.  Bringing that attitude our gratitude and abundance into my trading day opens me up to opportunity.

Alternatively if I notice that I am coming at my trading from a perspective of Anger or Fear then I need to catch that and be mindful that I do not express that in my trading.  A fear based mindset will close your mind off to possibilities and other perspectives.

d.  Review previous journal entries to find patterns or recurrences. 

e.  Spend time visualizing your areas of weakness or strength.visualizing

For instance if I notice in my journal that I’m having issues taking the setup on a particular sequence of market action then I will spend this time running through the pattern.

Or if I’m doing something right then I want to emphasize the correctness of that action and visualize myself taking that action over and over again by replaying and rehearsing it mentally.

Think of this exercise akin to how a pro basketball player visualizes sinking a free throw before stepping up to the line.

The visualization practice will give you an unfair advantage if you take it seriously and create something so vivid and clear that your mind will not know the difference between the scenarios you have given it vs. real market action.

3.  Market

After I’ve completed my physical and mental checklist then I’m ready to focus my attention on the markets, this is the part of the routine which I think most traders invest most of their time.

Over my cup of coffee I’ll fire up the charts and begin to analyze both market structure and internals.

To give you an idea of how I trade, I primarily focus on intraday trading the #ES with my sweet spot in terms of my hours of market operations occurring between 930am-12pm EST.

My setup chart is a 610 tick so my pre-market routine is focused primarily on examining the larger timeframes like the 1500 and 4500 tick charts on the #ES.

Here is my checklist of market questions –checklist

a.  Did anything significant happen in the overnight/pre-market session?  And what was volume like?

b.  Are there any new gaps or previous gaps on the #ES that could get filled in the upcoming trading session?

c.  What is the macro picture?   Are there any major news events occurring today/this week?

I personally use Econoday to check for news.  I know a lot of other trades like Forex Factory.

d.  What is the market structure?

e.  What is the primary trend?

Open a naked chart and physically draw the primary trend.

f.  What are the areas of primary resistance and support?

Mark them down.

g.  What is the ratio between SPY vs. IWM?

This comparative ratio is a great ratio to watch to help you build a market filter or bias.  In short if the IWM is stronger than the SPY that means speculators are bidding up small caps over large caps which would be bullish.  If the IWM is weaker than the SPY then you could conclude that speculators are selling out of the speculative small caps which would be bearish.

Conclusion

If I can distill this post into one single tip it would be the following.

Do yourself a favor and give yourself enough buffer between the time you wake up and the time you take your first trade.  The last thing you want to be doing is feeling rushed into your first trade as this will set the wrong tone for the rest of your trading session.

Now you’ve heard my morning routine.  What does yours look like?  I’d love to see and hear your comments below.

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Building the Perfect Pre-Market Ritual

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