How well you prepare for the trading week sets the tone.
Are you walking into the market prepared? Excited? Relaxed? Or are you scrambling and mostly trading by the seat of your pants?
The unfortunate truth for the majority is the latter…
I traded by the seat of my pants for years! You know what ended up happening?
It was kinda like some schmo from the audience stepping into the boxing ring with Deontay Wilder. Not a great idea!
So what does market prep like a champ look like?
3 Key Questions To Ask Yourself
First, understand that preparing for the trading week doesn’t have to take a lot of time!
It does, however, take is consistency.
What you want is a trading process that will help you meet your goals, that you can execute well, and that you enjoy doing. If any of those three are missing you’re screwed.
- Does my trading process help me meet my goals?
- Am I able to execute it well?
- Is it fun?
Hopefully you answered yes to all three. If you didn’t and would like some help getting back on track, go to my coaching page and book a free 20min sesh with me.
My 2 Step Trading Process
STEP 1: Gauge the ‘Market’s Mood’
- Review the major indexes on the Monthly, Weekly, and Daily time frames
- Assess the number of New Highs vs New Lows being made
- Observe what kinds of stocks are setting up. The total number of setups there are. And the types of setups there are (bullish or bearish, early or late stage).
STEP 2: Find Trade Ideas for the week
- Assess every setup I found in ‘Step 1’
- Determine the Reward:Risk of all trades
- Dive deeper into the setups that offer at least 3:1
- Place working orders with my broker
This whole process takes only a couple of hours each weekend. It actually takes longer to create the content around it than it does to perform the exercise itself.
My process actually hasn’t changed much from before I quit my day job.
The key for you with all of this is making it your own. Modeling success works. Attempting to clone it does not.
I made this short video outlining my market prep for the week of 11-11-2019. Enjoy!
Michael Lamothe founded MARA in 2018, and his mission is to help traders succeed in the market by focusing on mindset. Michael has helped thousands of traders through his methodology. He is an international speaker, presenting at AAII, Stocktoberfest, Benzinga’s Global Fintech Awards, and more! He’s also been featured on NASDAQ Live.