Here’s an Exercise to Help With Your Premarket Preparation

Each morning before the market opens up, I go through every position that I have in my portfolio and I review the stop-loss, and what would have to happen for me to book my gains in a trade today, or to cut my losses, prior to my stop-loss being reached. 

So I write out everything and what I plan to watch for in each stock I own during the course of the day. From the moving averages, to key support and resistance levels, to developments on weekly and daily charts. I note all of that for every chart. 

However, another practice that I have become fond of lately is, with the knowledge of how the premarket is currently trading, I will start envisioning in my mind various scenarios playing out in my mind, and how I would react to them. 

I see myself playing through a myriad of market scenarios, and individual stock plays that I am watching in my head and imagine myself following the market’s direction and placing my trades accordingly –  like a football player imagining himself throwing the winning touchdown pass to his wide receiver in the Super Bowl. 

In fact one of the best aspects of this is imagining certain unfavorable conditions playing out and then imagining myself NOT taking the trade and simply doing nothing as a result. 

Now I know what you are thinking, “That is some weird, New Age stuff”, but it isn’t. There are piles and piles of research that suggests playing out possible scenarios in your head and imagining/role-playing yourself making the right decision has a strong correlation with actually making the right decisions in real life. And what I find quite often is the scenarios that I imagined in my head actually coming to fruition once the market opens, and because I game-played that scenario in my mind before the market opened, I know how I should exactly play the market in that situation without having to act ‘on-the-fly’. 

So try it, before you knock it down as having no merit. It doesn’t guarantee you more profits, but it does put you in a state of mind where you have already played out multiple scenarios in your mind and how you will react to each of them, so that if those scenarios do show themselves when the market opens up, you will find  yourself in a clam state of mind and ready to take what the market throws at you.