There are literally a million things that run through my mind when I wake up every day.
How are my stocks doing? Did an oil pipeline burst in Iraq? What did Trump tweet this time? With so many potential distractions that enter my mind every morning, I have made a it a habit to focus on what really matters to me as a trader and I can set up my day for success in less than the time it takes to finish brewing my 10 ounces of Folgers.
As soon as I open my eyes, the first thing I do is give thanks for another day. The second thing I do is to pick up my phone and look at what the futures markets are doing.
I generally focus on just a few key things. I look at what the S&P futures are showing to get an idea of the broad market’s expectations of the day, and to see if any major news has been priced in overnight.
Next, I’ll look at gold and oil. I like to trade these two commodities so they’re definitely on my watchlist. I find that the after-hours prices shown on many platforms really don’t matter when I wake up at 4 a.m. CST to make a Wall Street Report video.
These prices tend to be institutions who are able to buy and sell outside what the retail trader is capable of doing, true market prices are really only relevant when the market opens.
At 4:30 a.m. almost every day, the Wall Street Journal Twitter account publishes its front page preview. I find this resource at this time almost indispensable. Pretty much everything you absolutely need to know is covered on the front page.
I like to read it from the top all the way down, and then all the headline blurbs on the side to get an idea of anything that might impact what I’m trading. If there’s news about a healthcare stock, then I know an ETF like XLV will be impacted.
If there’s tech news then I can reasonably expect XLK to show the results of the news. If Tesla CEO Elon Musk is anywhere on the page, then TSLA is most likely having financial problems (again).
At this point, I go on with my day.
I take my kids to school and put trading in the back of my mind. When the market opens at 8:30 a.m. I like to immediately see what has happened in my portfolio, and then make plans for adjustments as necessary.
With options trading, the probability of profit is determined when the trade is entered. It’s usually only after several days and potentially a few news stories that an out-of-the-money call or put spread show any signs of trouble.
The great news is that with options, it’s not just buy and hold and hope for the best strategy. There’s a myriad of ways to defend a trade gone wrong, which we will cover in Thursday’s column for Money & Markets.
While there’s literally a million things you could focus on when you start your trading day, try to find what works best for you without being overwhelmed.
For me, that’s seeing the futures market early in the morning, checking the headlines for anything that can impact my portfolio and lastly, observing how the market opening has impacted my trades and putting together an action plan to take advantage of new trades, or to mitigate some of the risk inherent with any portfolio.
This whole process can take less than five minutes and sets the day — and your portfolio up for success.