What Are You Doing During Premarket?

Since the election, and especially Thanksgiving week heading into December and January, I’ve been telling everybody to get ready for some big price moves…

I mean, look at the S&P 500 between last Wednesday and Friday!

We’ve already had a lot of action, but there’s much more to come!

And there are several ways to prepare:

On Friday, I discussed running daily scans. Every trader should make a habit of doing this.

Whether you’re a part-time or full-time day trader, you should be running your scans, even if you do nothing else. That’s the bare minimum.

Run those scans to reduce your stock list to 50, 20, or even 10 top tickers.

Then you can walk into the trading day with just a few solid ideas instead of an overwhelming bunch of noise.

But there’s much more you can do in addition to that and still keep things simple.

Okay, what separates the trading amateurs from the pros?

Preparation, preparation, preparation.

Every successful trading day starts with a game plan, and I’m here to break down the three things you need to do after you run your scans every morning during the premarket.

Look at Market Sentiment:

After you run your scans, you need to take the pulse of the overall market. 

To do that, you should check the S&P 500, the Dow Jones, and the Nasdaq. 

This doesn’t mean you have to trade the S&P 500, particularly if you’re trading high-volatility, low float stocks, but you should always know what’s going on in the broad market. 

Remember, three out of four stocks follow the market, and this definitely applies when you’re trading small-cap sector sympathy plays. 

For example, if NVIDIA Corp (NASDAQ: NVDA) is running, an AI penny stock that’s not part of the NASDAQ will probably run too. 

If the indices are green and gapping up, you’ve got a bullish day ahead, which increases your odds of success with breakouts. 

And if the market’s in the red, it might be a good day to step back, study, and save your trading for another day. 

Look for Simple Breakouts:

In a raging bull market, the strongest plays come from stocks hitting multi-week, multi-month, or even multi-year highs. 

Price breakouts signal strength and strong stocks tend to maintain that strength.

Don’t try to be a hero with “undiscovered gems” or down-trending stocks…Most of the time, that just ends in frustration or, even worse, a huge capital loss.

Instead, focus on breakouts that align with market sentiment and have an accompanying increase in volume. These plays can turn into multi-hour, multi-day, or even multi-week runners.

Watch for Former Runners:

If a stock has a history of making big moves—say it went from $2 to $10 a year ago—it’s more likely to catch traders’ attention and run again.

This is where using charts and learning tickers pays off. 

Why?

Day traders have great memories, and they’ll pile into stocks they’ve seen move before. If a former runner is holding its highs pre-market, put it on your radar.

And to pare down your list of former runners, focus on stocks with the potential for multi-day runs.

I recommend using a rolling watch list methodology…

Every morning, review your watch list from the last five days, looking for stocks that are still holding near their highs or showing continuation patterns. 

These are the setups that can lead to multi-day runs.

But Make Sure You Have the Right Tools

You can’t do any of the things I listed above without a great trading platform. It should include charting, technical indicators, stocks screeners, and more. 

My top pick is StocksToTrade and it’s the one I use every single day. 

It covers all the bases and has everything traders like me look for in a platform. It also offers a selection of add-on alert services so you can stay ahead of the curve.

Grab your 14-day StocksToTrade trial today — it’s only $7!

My Final Thoughts…

Routines like the one I described above take some time to master, but once it becomes second nature, you’ll start your trading day with confidence every time.

And don’t forget my daily Premarket Prep. I go live daily at 8:30 a.m. Eastern to prepare traders for the day ahead with the best setups and patterns I’m seeing.

Premarket Prep is part of my Daily Income Trader Service. Register for one of our free live webinars to see if DIT is right for you.

If you’re looking for more trading mentorship as well as stock ideas, subscribe to my StocksToTrade Advisory service.

Every STT Advisory member gets a monthly newsletter with a list of my top picks, three weekly videos with my watchlists, bonus reports, and more. 

 

Sign up for StocksToTrade Advisory right here!

 

Have a great day, everyone. See you back here tomorrow. 

Tim Bohen

Lead Trainer, StocksToTrade