Investing

Trading Strategies: Prep work

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It is curious how, seen from the outside, it seems that trading consists only in the time slot that we are actually in front of the screen executing trades. Normally, a couple of hours daily at most, if we are talking about an intraday trader. We are not prepared to maintain the maximum concentration that takes much longer than that, and you know that losing concentration in this business is very expensive.

Nothing could be further from the truth. The day-to-day trading starts well before sitting down in front of the ready market, and it usually ends a little after deciding to stop the trading for that day. And those spaces before and after trading are as important (or more) than the trade itself.

Strategy Preparation

Usually, before actual trading, you must consciously prepare your strategy for that trading day. When the time comes to catch the mouse ready to enter the market as soon as the right conditions are met, we have to have a very clear grasp of that strategy that we have previously designed based on the market situation.

It is imperative to verify how the markets moved the previous day: to analyze the opening well, to study trends in higher temporal ranges, to determine if there were price zones in which the price was maintained in a lateral range, to check if the supports and resistances were respected etc…

The amount of work to be done in that pre-operating phase is almost endless. It is you who should set a limit, because you could spend hours analyzing the markets from different technical points of view. Over time, you’ll see what’s really important and what techniques work best for each of the markets.

Determine operable zones

For example, in my case I always start by determining the general trend of the market on a much higher temporal chart, to know if we are currently in a momentum or regression on that trend. I am not one of those who only take moves in favor of the main trend, but I do consider it to be more or less demanding with my goals.

Then, I set the levels that I consider relevant for the day’s session. Never, absolutely never, do I start to trade if I do not have those levels marked. And not only do I set the levels of support and price resistance, but I also paint the areas that I consider worth trading, and in what direction I would like to trade them. I am not interested in risk at all in areas where it is more difficult for the price to adopt clear directional movements.

And of course, I check what news will be relevant during my hours of trading, and I schedule alarms to never be in the market during those moments. Another day I will go into detail on what may happen during relevant news so stay tuned.

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