Pre-market prep

Every intraday session has the same shape. Volume and range are front-loaded into the first hour, decay through the middle of the day, and return into the close. A day trader who knows this map avoids most of the mistakes that come from treating 12:30 like 9:35. This module walks the clock. It starts before the bell, because the trades you take at 9:31 are decided at 8:45.

The 45 minutes before the open

US equities trade in pre-market from 4:00 ET, but almost nothing useful happens before 8:00, and the real information arrives between 8:30 and 9:30. Your prep window is 8:45 to 9:30. In that time you need to answer four questions.

1. What is the overnight context? Where are the index futures relative to yesterday's close, high and low? A gap of more than about 0.5% in the S&P changes the day's character. Note the overnight high and low of ES or NQ; both act as levels in the first hour.

2. What is scheduled? Economic releases at 8:30 (CPI, jobs, PPI) and 10:00 ET (ISM, consumer sentiment), Fed days at 14:00, and earnings before the open in the names you watch. An 8:30 release means the overnight levels are already stale by 8:31. A 10:00 release means the first 30 minutes may reverse at 10:00.

3. Which instruments are in play? For index futures traders this is trivial: the same contract every day. For stock traders it is the whole job. Build a watchlist of two to five names that have a catalyst (earnings, news, a large gap) and pre-market volume well above normal. Ignore anything with fewer than 100,000 shares traded pre-market or a spread wider than a few cents.

4. What are the levels? For each instrument, mark:

• Yesterday's high, low and close
• The overnight or pre-market high and low
• The nearest daily-chart level above and below (a prior swing, a round number)
• Yesterday's VWAP close, if the platform shows it

That is usually four to six horizontal lines. More than that and you will find a "level" at every price.

  Pre-market sketch for a stock gapping up 6% on earnings

  |                                      pre-market high 52.40 ----
  |                          ___/\__/\_
  |                     ____/           \_    <- pre-market range
  |                    /
  |  yesterday close 49.10 -------------------------------------
  |
  |  yesterday low 48.20 ---------------------------------------
  +-------------------------------------------------------------
     4:00        7:00       8:30       9:00       9:30 open

Write the plan before the bell

The output of prep is not a feeling, it is a list. One line per instrument:

XYZ. Gap +6% on earnings beat, PM volume 2.1M. Levels: PMH 52.40, PML 50.80, Y-close 49.10. Plan: ORB long above 52.40 if it holds 5 min; VWAP reclaim long if it flushes and reclaims; no shorts below 50.80 in the first 15 min.

The plan names the setups from Module 4 that are allowed today and the ones that are not. Every trade you take at 9:45 should point back to a line written at 9:15. If it cannot, it was not a trade, it was a reaction.

Key idea: Prep converts the open from a surprise into a set of pre-decided if-then rules. The rule you write at 9:15 is the one you can follow at 9:32; the one you improvise at 9:32 is the one you will regret.

What prep is not

• It is not reading Twitter. Sentiment is not a level.
• It is not running ten scanners. Two to five names, a handful of levels each.
• It is not deciding the direction. The plan says "long above X, short below Y". The market picks.
• It is not optional on quiet days. Quiet days are when unprepared traders manufacture trades.

A 30-minute prep template

The last line is the most important. Module 7 will set the limits; the prep routine is where you confirm they are switched on before you can be tempted to switch them off.

Try it: Tomorrow, do the 30-minute template on paper without trading. At 11:00 check which of your pre-written if-then lines triggered and what happened next. Do this for five days before any live trade in this course.

Recap

• Prep runs 8:45 to 9:30 ET: overnight context, scheduled events, instruments in play, levels.
• Mark four to six levels per instrument: yesterday's high, low, close, the pre-market range and the nearest daily level.
• The output is a written if-then line per instrument naming which setups are allowed today.
• Filter stocks by pre-market volume and spread; index futures traders trade the same contract every day.
• Confirm daily loss limit and max trades are enabled before the bell.