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Proper preparation

Below is a checklist of things you can do to put yourself in the best position to compete in the markets. This job is what you make of it. We offer these ideas for your benefit.


 Read briefing.com before bed and start thinking about some stocks to trade for the morning. (In an August 2009 Wall Street Journal article, Steven Schonfeld, considered by many as the godfather of the prop trading industry, admitted he sleeps only three to four hours a night awaking early to think about trading setups for the next day. We should all be so lucky, as Schonfeld reportedly took home $200 million in 2008 and built himself a nine-hole golf course in his back yard.) Where are they trading in the after-hours? Jot down these prices and compare them to their premarket prices.

 Get to the office early. Every once in a while around 8 AM there will be an opportunity to make quick money on a breaking news story. If you live far away from the office, get on that 5-something AM train. It will give you an edge. Also, valuable information can be obtained by watching stocks trade in the premarket. What are the ranges of the stocks you are watching? How much volume are some stocks doing?

Further, the earlier you arrive, the more time you have to leaf through news. Sometimes in those extra minutes you find the stock of the day that you wouldn’t have if you had spent less time researching. Moreover, you have extra time to ask members of your desk about a Stock In Play and obtain their feedback. Most prop traders do not arrive later than 7:30 AM. Certainly experienced traders with a system can stroll in later. And NYSE traders can stroll in later than NASDAQ traders. 8:00 AM is the latest that most serious traders arrive.


 Read briefing.com again in the morning and pick a few stocks. Think about your style and determine the best two stocks of the day for you.

 Compile statistics such as daily volume, important technical levels, intraday range, and short interest. At SMB, we have developed a SMB Stock Data Sheet for such information.

 Set alerts for the stocks that did not make the cut, but are worth some attention. Other pretty good ideas that did not make your two stocks cut should still not be discarded.

 Create a road map for your morning. Develop some plans as to when you might take a position in one of your stocks. If you see the xyz scenario, then you will buy at this price. Continue creating “if-then” scenarios for each outcome.

Consider the different ways the stocks you have picked might trade. Will they sell off first and then be bought for the rest of the day? Will the stock quickly climb in the morning trading session and search for a seller? Will you be completely wrong and the stock will just trade lower? Under what scenarios should you aggressively buy the stock?

Are there easier stocks to trade? After you have narrowed your stocks to a few and have gathered all the information necessary, keep asking yourself if there are easier stocks to trade.

 Listen carefully during the morning meeting. 

 Review your index cards (reminders to yourself and the best of the old school techniques) before the Open. 

 Prepare mentally. Visualize a great trading day. Perform your visualization exercises. Today will be a great day. 

 Prepare physically. Drink some water to hydrate yourself during the morning stretch. Get comfortable in your seat. Breathe. 

 Review charts. After the Close, review the charts of top price and volume gainers and losers. Also, check the charts on the stocks that are hot. Find excellent entry points and set your alerts for such prices. Consider developing a basket of stocks, and regularly review the charts of the stocks in your basket.

All these little things make big things happen. Do them consistently, and the profits will follow.

we do not make a trade unless we know the average volume, daily range, important technical levels, short interest, and fresh news for our stocks. Only armed with this information can we make One Good Trade.

Proper preparation is not enough to make One Good Trade. Hard work comes next.

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