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 losses.

Fail to prepare and you prepare to fail! Getting ready for your trading day takes just 30 minutes or so and includes ensuring you're calm, comfortable and alert, have analysed markets in advance and have a well-designed trading plan to work from.

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 approach fundamental and technical 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:

Make sure you're well rested, fed and dressed before you sit down at your trading terminal. This will help you remain calm and speed up your responses.

  • 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:

Use just one A4 sheet of paper in landscape mode for your daily prep sheet – split it into three boxes to make notes of upcoming events/important technical levels, trade ideas and other observations.

  • 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 market conditions.

You can download a trading plan template by clicking on the following button:

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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 which direction you think markets you will trade will move in; plus any key technical levels like support and resistance. Then note all of this down in the appropriate boxes.

Conducting technical and/or fundamental analysis before your trading day starts will help you find new trading opportunities and manage open positions.

This will help you find new trading opportunities and manage any positions that are already open.

Fundamental analysis

Read the news and make a note on your daily prep sheet of anything that could impact on your trading day. This could include central bank meetings, 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.

Technical analysis

Take another ten minutes before you start trading to scan over price charts and 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 risk to reward ratio, entry level, stop loss placement and profit target.

Summary

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.

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  • Could anybody share resources or services that one might use, for example where do you read your news or where do you consult your economic calender, do you follow blogs or use other online tools ?

    I find it very interesting in knowing more about what others use on a daily basis.

    Best regards
  • I usually check a simple economic calendar for news (nowadays on tradimo) it is provided by a serious agency: investing.com so it is a professional service and contains everything.

    I don't obsess about fundamentals much, unless there's a big move that happens when nothing is scheduled I usually check CNBC, Reuters for some breaking news, or their twitter @CNBC, @Reuters @ReutersBiz on mobile. That is enough, I am not an economist so not going to pretend I understand what is really going on smile

    I am also subscribed to couple of youtube channels where regular freebies come out every now and then. They are not the holy grail i am sure you find or already have some as well. But that's it. I try to stand on my own 2 feet.

    I am also a regular listener to the the Traders's Podcast from Rob Booker which is like a radio for traders but only 2-3 shows a week. It has lot of useful tips on trading, thinking and living well!
  • I would like to suggest this website which I use for my news feed: http://www.***********.com/ it brings up to date trading news fundamental as well as technical. It is a free financial news service that collects news from a number of sources and place on one page and let you decide what site you would like to read, watch, or listen to. You don't have to refresh the page for news, it automatically refresh itself. You can also adjust the sources where you want your trading info to come from. It also has twitter alert from known analysts.

    Hope this help
  • The link for the Coaching by Jack video is broken. Is the video still available?
  • Hi Jnorrislll,
    Yes we have changed our webinar software and those links don't work anymore. We are continuously releasing these recordings so watch out for them, "daily preparation" should be coming up soon a well.
    Regards.
    Peter

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