Preparation is one of the most important stages in the entire trading process. In the same way as failing to warm up before a gym work-out can lead to injury, failing to prepare properly for a trading session can lead to unnecessary.
There are a number of methods that you can introduce into your daily routine to ensure you are always in an optimal trading state.
In this lesson, we will guide you through the preparation process, showing you how to create a daily prep sheet and trading plan and how to approachand analysis.
We will also show you ways to prepare yourself physically and mentally, to ensure that when you sit down at your trading terminal you are calm, comfortable and alert.
How to prepare for your trading day
To begin with, set aside around 60 minutes before each trading session to work through the following steps.
Once you have developed your own preparation routine this can be cut to 30 minutes or even less.
Step 1: Create the right physical and mental state
Getting yourself in the right physical and mental state for trading is an underestimated but crucial stage in your trading prep. The following pointers will help make sure you are alert and focused from the moment you sit down:
- Give yourself plenty of time: don’t expect to be at your best for trading just ten minutes after you wake up – you'll still be groggy and will be prone to making mistakes.
- Dress for success: ditch that dirty t-shirt or dressing gown for something smart but comfortable. Surveys show that 55% of workers believe that smarter attire at work makes them perform better.
- Exercise: doing some light exercise – even if it's just a brisk walk around the garden to take some fresh air – will help you concentrate and improve your reactions.
- Fuel up: hunger and thirst make it harder to concentrate and can spoil your performance. So eat something light before you trade and make sure you're hydrated.
- Tidy up: working at a cluttered desk can make it harder to concentrate. Your daily trading plan (see below) should be in front of you at all times and you may miss a trading opportunity if you're searching for it.
Step 2: Create a daily trading plan
Your daily prep sheet or trading plan is a one-stop-shop including all the data you will require over the course of the day. This is how to make one:
- Take an A4 sheet of paper and turn it to the landscape position – human beings naturally look at things in wide screen and it will also fit easily between you and your keyboard.
- Limit it to one page and be concise – trading requires fast reactions so it's important that you can see everything at one glance.
- Date it – keeping dated copies of old prep sheets will help you evaluate how you are progressing as a trader.
- Draw two boxes and split them down the middle, top to bottom.
- Label the left-hand box as 'news/events and technical analysis/patterns'. Label the right-hand box as 'trade ideas'.
- Create a long, thin box at the bottom of the page.
- Label it 'other information' – you can fill this with any notes or observations you make throughout the day concerning your trades and conditions.
You can download a trading plan template by clicking on the following button:
Looking for a mentor?
Matthias from our Tradimo Premium team will design a learning plan tailored to you that gives you access to new courses and live webinars every month as well as priority private email support.Order our Tradimo Premium Service now
Step 3: Analyse the markets
Once your daily trading plan is created, you need to fill it. Use technical analysis, fundamental analysis or a combination of the two to identify whichyou think markets you will trade will move in; plus any key technical levels like and . Then note all of this down in the appropriate boxes.
This will help you find new trading opportunities and manage anythat are already open.
Read the news and make a note on your daily prep sheet of anything that could impact on your trading day. This could includemeetings, economic data releases, geopolitical events or company news.
Once you know what to look for and where, this shouldn't take longer than five minutes.
Take another ten minutes before you start trading to scan overand make a note on your daily prep sheet of any levels you plan to trade.
Note down your reason for placing the trade, your planned, entry level, placement and .
In this lesson you have learned that …
- … preparation is one of the most important stages in the trading process – failing to do it properly can lead to unnecessary losses.
- … preparing for your daily session will take around 60 minutes to begin with but can soon be cut to 30 minutes or less.
- … make sure you are well rested, fed, hydrated and dressed smartly but comfortably before you start trading – this will help you remain calm and speed up your responses.
- … make sure that your desk is tidy and you can see your daily trading plan at a glance.
- … a daily prep sheet should comprise just one piece of A4 paper, viewed in landscape mode.
- … date it and divide it into three boxes – one for news/events and technical analysis/patterns, a second for trade ideas and a third for other information.
- … conduct technical and/or fundamental analysis on the markets you plan to trade and make notes on your prep sheet – this will help you find new trading opportunities and manage existing positions.
- … for fundamental analysis you should scan the news for central bank meetings, economic data releases, geopolitical events or company news and note which could affect your trading day.
- … for technical analysis you should scan charts and make a note of any key levels that you plan to trade, plus details as such your anticipated entry levels, targets and stop losses.
Looking for a Top Broker? Sign up through Tradimo & get extra benefits!