"By failing to prepare, you are preparing to fail." — Benjamin Franklin
The market is not going to give you anything. If you don't prepare for the trading day, your screen won't flash a message to you telling you when the perfect time to BUY or SELL is. You have to put in the work.
That's why we found this conversation between Anthony Crudele of Futures Radio Show and legendary trader and mentor Jim Dalton so interesting. Here's the key to Jim Dalton's preparation that allows him to crush the market.
This is a continuation of our month-long series on how to get better trading every day. For complete access to this series, go to https://blog.topsteptrader.com/topic/september-trading-insights.
Outline Three Market Scenarios
Every day, Jim, who is an intraday trader, starts by going from his short time frame charts back to the longer term. The first thing he does when the market closes is look at a monthly barchart. He says that ensures his focus is of the overall trend. As TopstepTrader's Risk Manager Mick Ieronimo says, the longer time frame is always in control.
Then, he'll work his way down to the weekly, daily and shorter-time frame charts.
But that's not the work that got us interested. It's what he does next. Jim outlines three scenarios for the following day.
- The market will range.
- The market will trend higher.
- The market will trend lower.
Why? Because Jim wants to make sure that whatever the market throws at him the next day, he is prepared.
He said, "It is so easy for us to get opinionated. You can’t trade very long and not realize that there’s times you’ll bring your own personal biases into the market."
So if you want to start trading better (and we hope you do), end each day by outlining three market scenarios for the following day. What are the levels that are important? How would the longer term impact it? And how would you trade if that scenario plays out?
Then, the next day, you're able to take full advantage regardless of what happens.