A typical trading day: preparing to begin

by Jens Clever
Copyright 2003

Even though every day trader has a different daily routine I would like to share mine with you.

I usually start my trading day at 8:30AM EST by tuning on to financial news and the world news. When you're day trading, you must be informed. I try to get a general overview of the news that is moving the market and whether there might be further news breaking shortly (i.e. Fed announcements, economic news). I read most of the news wrap-ups over the Internet, but also listen to financial TV.

However, I take the information I get there very cautiously. Just recently for example they announced a new bull market on TV and the market saw a few very strong days of sell-off after that. You have to be careful of this sort of thing in your day trading.

A very important part of my preparation for day trading is the technical analysis of the market itself, especially the NASDAQ. I will use indicators such as retracements, moving averages and trend lines for my analysis.

Most importantly though, as a day trader, I want to look at recent lows and highs. In fact if someone would wake me up 2 minutes before the open and ask me to make a quick analysis of the market ,I would only look at the prior day's high for upside resistance and the prior day's low for downside support.

I would most likely do very well just by doing that. All market analysis is based on the daily charts.

The watch list

At the beginning of the trading day I have a list of stocks (a watch list) that I want to watch and potentially trade. This list was usually created the day before, after the market closed.

My watch list mostly contains stocks that I am interested in, based on technical analysis. I will add additional stocks to the list that are gapping for potential momentum trades, as well as stocks that are mentioned by other day traders in newsletters I receive every day. I will only consider stocks that fit my style of day trading and my risk tolerance.

After all that I sometimes have a big list of stocks, and that needs to shrink before the market opens. I try to sort out as many stocks as I can and only focus on three to four stocks that I actually put into level 2 screens and add charts to. There might be more stocks in my watch list, but rarely more than 10, simply because I would loose my focus by having too many stocks to watch during my day trading. (More articles on day trading.)