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My wife, Zena, is notorious for telling me to plan ahead, to organize my tasks ahead of time so that I can accomplish what I need to do. At times, I’m resistant to these suggestions. I feel that I should just be able to “play it by ear” and see what happens, that life shouldn’t have to be so orchestrated. I feel that I will catch some opportunities during my day, and miss others-haphazardly. It certainly makes for a more entertaining day.

Unfortunately, in terms of trading, the “play it by ear” approach just doesn’t work. Believe me I’ve tried. There were times when I would just wake up, turn on CNBC, and see some price action in xyz stock. Then, I would look at the chart, and just “play it by ear.” I would look at the daily chart, and maybe things weren’t set up just right. So then, I would turn to the hourly chart. And I’d think “Ohh yeah!”, now, I would find something, and if that chart didn’t look good, perhaps I would take a look at the weekly chart. My point is, if you start your day with the idea that you want to trade, but you didn’t plan ahead, you will catch some opportunities, miss some opportunities, and make mistakes on many other opportunities because you didn’t lay out your game plan ahead of time. Without taking the time, to make a list of the stocks that you will POTENTIALLY trade and PLAN how you will trade those stocks, you run the risk of grasping at inadequate set-ups in order to get your “trading fix” (and most likely with a smaller account). The conclusion of this...don’t take trades unless you have prepared ahead of time--if you couldn’t do the prep work, just take the day off, or prepare for the next day.

Just about every successful trader I know, prepares for the trading day ahead, and is disciplined and energetic about doing so. Although, different people prepare differently (surprise), there are a few commonalities, that I believe are critical.

1) they all either run scans, or look at lots of charts to make a list of potential candidates for the next day

2) they all evaluate what the position size of each particular trade should be, based on volatility, risk tolerance, or account size

3) they know what the entry triggers (set-ups) are to enter the position

4) they all evaluate all of the positions that they are in--to see if they may need to be closed during the next trading day

What do these tactics do? They keep you level headed; you now have a plan of attack. You won’t get sucked into weak plays without a significant edge. You will only take the easy money out of the market; you won’t reach out for just anything that passes by your screen. You also won’t make emotional, desperate reactions (that are usually wrong). Furthermore, you will have much less work to do during the distracting trading day. You now will only have to look for the set-ups to show-up in the few stocks that you already determined are advantageous for your trading style.

If you aren’t already preparing for your trading days, please do. It is probably the most valuable time I spend trading.

So for all that time that I resisted my wife’s simple advise - all I can say is Thanks, Zena - it works.

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