In this post, I share my best advice for creating a pre-trade session routine.
Trading is like working out, you don’t just jump on the weights and start lifting. Usually, you do a bit of stretching and cardio to get loose, limber, and warm up your body.
Successful trading is the same.
You don’t just roll out of bed, fire up your trading platform and start trading. Many new traders underestimate the value of a solid pre-session routine. A proper routine will prepare your thinking, mind, body, intuition, and conviction for your trading session.
Not a “Pre-Market” but Pre-Session Routine
Before we move forward there’s one important distinction I’d like to make. The phrase or concept I prefer is not a pre-market routine but a pre-trading session routine.
I make this distinction because pre-market assumes you’re getting ready for the market to open but quite a bit of trading is done in off-hours or in 24-hour markets such as FOREX, Futures, and Crypto. So I prefer to focus on developing and implementing a pre-session routine.
This is also helpful if you tend to break up your trading day. Maybe you trade the NY morning session and take an hour or so lunch and come back and trade the afternoon session. Outside of “lunch is for wimps” you should have a pre-session routine for the morning and a pre-trading session routine as you come back for the afternoon.
Outline of a Good Pre-Session Routine
A good pre-session routine will cover the following:
- Preparing your mind and body
- Planning for known events/news releases
- Gauging market/crowd sentiment
- Technical analysis (S&R, daily/weekly levels/ momentum, overnight session, etc)
* A good pre-session routine is also written down like a pilot’s pre-flight checklist.
Prepare Your Mind and Body
The first thing you do before you do any research, TA, or anything market-related is to prepare your mind and body.
Trading is about how you react to what the market does and how you react to your participation in the market. Going into your trading session with a complete clear mind and body is critical to ensure you trade your plan and trade with conviction.
I’ll be releasing more content with tips and advice on around mindset but for now, a good start is something I’ve outlined below. It’s a pre-trade session contract that I’ve used for years in my trading. It’s a constant reminder of the bad habits I need to avoid and a reminder of the proper thinking I need to bring into my trading session.
Download the Pre-Trade Mindset Routine sheet
I have tried mindfulness/meditation but it just never really stuck for me. I did find some calming benefit to spending 15 minutes meditating but for me, I just found it didn’t fit within my routine.
My form of meditation is most likely my morning routine before I do the pre-trade mindset. I usually have a juice mix for breakfast with some type of nuts or other fiber. I drink/eat this while doing some light pre-market. I can feel the nutrients enter my body (kind of weird to say) but that’s what I feel. About 2 minutes after I finish my first glass my mind is fully awake and ready to go.
Known Events/News Releases
Never start a trading session without knowing if there are known events or releases during your trading session (or might be affecting the volatility of your trading session).
These events range from FED FOMC release and new conferences, consumer confidence or employment reports, earning reports and days such as triple witching (I’ve found not as big an impact as it used to be).
It has never been easier to track these events with your own time zone offset. My go-to sites are:
- EconDay by Week – provides good coverage with red to green signals for importance
- DailyFX – Provides a good daily roundup with importance indicators and a good weekly overview. Harder to see the full week of events but does provide numbers or previous numbers of past releases if applicable.
Market Sentiment & The Crowd
The next element to your pre-trade session is trying to get an understanding of the current sentiment of those participating in the market. This sentiment differs per market and is much easier to get a feel for if you are trading the markets day in and day out.
The questions you’re trying to answer:
- What does the market care about?
- What are the dominant emotions driving decisions by the crowd?
- Do these themes or narratives align with what you see on charts and price action?
You can never know for sure but trying to gauge what themes, emotions, projections, and narrative is driving how “the crowd” might be viewing the market will provide the knowledge you’ll carry forward.
I suggest you do sentiment “research” before you dive into charts. The main reason for this is you want to see if you can find clues that the narrative of the crowd fits or aligns with your TA.
I should caution you here, there is a danger that you misread the sentiment or allow some narrative or social media chatter to cloud your conviction with trading your system.
It’s this simple risk that I don’t spend much time reading news, watching financial TV or videos, and social media before any trading session. I also believe most of the corporate media is bought and paid for or at a minimum every one of the sources they use has some hidden motive for sharing their perspective or possible “inside” knowledge.
Call me paranoid but unless you are a heavy sentiment or fundamental trader most of the news or commentary you read today is outdated (priced into the market) or just flat out a lie or wrong.
Be Dumb! That’s right, intentionally be stupid. What I mean is never try to figure out “why something is moving”. Sometimes you can find a catalyst such as a news event, earnings, or aliens landed in London– but the true and real answer is you will never know for sure what moves markets or individual tickers.k
With all the caveats out of the way I suggest 2-3 financial news sites and as much as this pains me to say I’d maybe add in Twitter. Here are my go-to sites:
- Financial Times – Good worldwide and vast coverage.
- Yahoo! Finance – decent coverage but I find it has annoying narratives (but the fact they exist maybe shows they are creating content around some data)
- Twitter – If you follow the right people or hashtags you can get a good overall view of what the FinTwits are thinking. Keep in mind and maybe I’ll do a video on this but there is a certain personality type that exists on Twitter.
- Other – I’m positive there are better and probably more specific sites you can find– for my trading I only need to glance at the sentiment to ensure I’m not missing anything.
Crypto Sentiment
- CryptoPanic – If you are in the crypto market you should be checking this at least once a day
- TechMeme.com – If you visit TechMeme at least once or twice a day you’ll start to get a feel of the sentiment that is outside the crypto bubble but still has one foot always in
- YouTube – If you subscribe to popular crypto channels you can use the tags to drill down. Scan the videos and headlines. Remove YouTubers who do lame clickbait stuff, they are clueless.
What Are You Trying to Figure Out?
You aren’t trying to see what other “traders” or “gurus” think. You are looking for the underlying theme that is driving market behavior or what the market finds important.
This is where I have to give some credit to the financial media. They are profit and click/viewer driven so they are not going to stray to far from what they think or believe their audience will resonate with. While this is a nuanced point I do find it worth mentioning when you analyze the financial media.
The bottom line is you aren’t reading any of these stories (unless you are interested and can ensure it won’t affect your trading in a negative way).
What I find works best is glancing at the headlines and the lead of the story (first paragraph or snippet summary). This will provide you with the general news, events, and themes that are currently driving the front-page narrative.
Technical Analysis
I won’t go into too much detail because the type of TA you are going to do is dependent on your own personal trade system but I will provide some general guidance.
First, see if you can find clues that the market is reacting to the sentiment or narratives you’ve picked up in your news analysis.
If you’ve adopted the RexDog Trading System then your bias indicator is the RDA (Rex Dog Average). Generally above the RDA you are bias long and below you are bias short. For detailed overview visit this section of the training.
You also want to see if there are any clues that the market is stalling or waiting for the known events on the calendar.
This is where I believe the sentiment analysis can only take you so far. You don’t really know what is driving the decisions of any level of any market participant. But you want to see if there is some belief in the market that can be gleaned through charts and your trade system.
What’s Most Important for TA and Pre-Session
The best advice I can give here with your TA is– you should have a step-by-step process.
In your trade journal you should track how well your pre-session routine is accurate. If your pre-session routine is wrong or misguided this can be the catalyst for all of your trading to be off. That’s why having a process you have defined and written down allows you to figure out where you have mistakes or challenges.
It’s a given that you should be tracking weekly opens, closes, daily levels, etc. but beyond that, if you’re an intraday trader your system should be reactive to what happens as the day unfolds.
If you’re swing trading then outlining key areas of position entries are key. A swing trader must have a pre-session routine that provides an edge… more on this in another post.
Example from My Own Trading
For instance, in March 2020 the sentiment was the world was headed for another great depression. But most pro traders were looking for clues of some type of bottom (even if it was short-lived). I’m not sure anybody could have predicted the V-shaped recovery that hit but I remember specifically reading the news and watching Bloomberg– everything was doom and gloom.
This is one of my most recent “I’m a pro-trader” moments. The RexDog Trading System was screaming (especially on lower timeframes) there is a possible bottom and go long. Two days in a row fading the highs were short-lived trades. This is a prime example of something I say often… “don’t argue with the chart”.
The sentiment was doom and gloom but the charts and the RDTS was signaling the opposite. The NQ above and the RUT below both have clear RDTS structure, patterns, and momentum shifts.
The Big Takeaway
Your pre-trading session routine sets the tone and foundation for your trading. It’s a critical component of any successful trading system and is something you really should never trade without.
It should be a process that you have written down. It should also be something you evaluate often to ensure it’s properly setting you up to have a successful trading session.
This is one thing in your trading you should not ignore.
