PROCESS INTERMEDIATE
How to Prepare Before the Market Opens
This lesson explains how to build a structured premarket routine before trading the New York session. You will learn how to review economic events, analyze higher-timeframe structure, mark relevant levels, map liquidity, identify current price location, create bullish and bearish scenarios, define risk limits, and determine the exact conditions required before taking a trade. By the end of this lesson, you should be able to begin the session with an organized plan instead of reacting emotionally to every candle.
Why Premarket Preparation Matters
The market can move quickly after the New York session begins.
If the trader waits until price is already moving to begin analyzing the chart, several problems can occur.
The trader may:
• Chase a completed move
• Mark levels emotionally
• Change bias after every candle
• Enter without checking economic news
• Use the wrong contract size
• Forget account limits
• Confuse movement with opportunity
• Take a trade before the setup is complete
Premarket preparation moves important decisions away from the most emotional part of the session.
Instead of trying to determine everything while price is moving rapidly, the trader decides in advance:
• What the higher-timeframe market is doing
• Which levels matter
• Where liquidity may exist
• What would support a bullish idea
• What would support a bearish idea
• What would invalidate each scenario
• How much risk is permitted
• When trading must stop
The trader is not attempting to predict every candle.
The trader is creating a framework for responding to the market.
- Preparation Reduces Improvisation
Improvisation occurs when a trader invents decisions during the session.
Examples include:
• Marking a level only after price reacts from it
• Changing the stop because the trade is losing
• Deciding the target after entering
• Creating a new strategy because the normal setup did not appear
• Increasing size because the previous trade lost
• Extending the trading window because no trade occurred
A premarket plan does not remove every decision.
It reduces the number of important decisions that must be made under pressure.
Before the session begins, the trader can determine:
• Maximum risk
• Maximum number of trades
• Important market levels
• Economic-event restrictions
• Bullish and bearish conditions
• No-trade conditions
During the session, the trader compares live price behavior with the prepared plan.
- Preparation Is Not Prediction
A premarket plan should not state that the market must move in one direction.
A weak plan may say:
“NQ will go up today.”
This statement provides no useful conditions.
It does not explain:
• Why the market is expected to rise
• What must remain protected
• What would invalidate the idea
• Where a long would be considered
• What would support a bearish alternative
A stronger plan may say:
“The four-hour structure remains bullish while price stays above the protected low. If New York holds above support and confirms strength, buy-side liquidity above the previous high may become relevant. If support breaks and price accepts below it, the bullish scenario weakens and a deeper move toward sell-side liquidity becomes possible.”
The stronger version prepares the trader for multiple outcomes.
The goal is not to prove a prediction correct.
The goal is to respond consistently to evidence.
- The Purpose of a Premarket Routine
A useful premarket routine should answer five major questions.
Question 1:
What has the market already done?
Question 2:
Where is price currently located?
Question 3:
What important levels and liquidity areas remain?
Question 4:
What would need to happen for a valid setup to form?
Question 5:
How much risk is allowed if the setup appears?
If the routine does not help answer these questions, it may contain unnecessary information.
- Preparation Should Be Repeatable
A premarket routine should be performed in a similar order each day.
A repeatable process helps the trader:
• Avoid missing important information
• Compare one session with another
• Build consistent journal data
• Reduce random decision-making
• Identify which parts of the analysis are useful
• Improve preparation speed over time
The routine does not need to be complicated.
It needs to be complete enough to support the trading model.
- Begin With Personal Readiness
Before analyzing the market, the trader should assess whether they are mentally and physically prepared to trade.
A technically strong market setup can still be executed poorly when the trader is exhausted, distracted, sick, angry, or financially desperate.
Personal readiness questions may include:
How many hours did I sleep?
Am I physically uncomfortable?
Am I distracted by another responsibility?
Am I angry about a previous trading result?
Am I under pressure to make money today?
Am I trying to recover a recent loss?
Am I able to accept the full planned risk?
Am I able to stop if no setup appears?
The trader should answer honestly.
Premarket preparation includes preparing the person who will execute the plan.
- Physical Readiness
Physical condition can affect:
• Patience
• Reaction speed
• Emotional control
• Attention
• Decision quality
Possible problems include:
• Sleep deprivation
• Hunger
• Dehydration
• Pain
• Excessive caffeine
• Illness
• Lack of movement
A trader does not need to feel perfect.
The trader should recognize when physical conditions may require:
• Smaller risk
• Fewer trades
• Simulation only
• No trading
- Emotional Readiness
The trader should identify their emotional state before opening the platform.
Possible states include:
• Calm
• Focused
• Anxious
• Frustrated
• Excited
• Desperate
• Overconfident
• Distracted
Emotions are not automatically reasons to avoid trading.
Unrecognized emotions are more dangerous because they can quietly influence decisions.
Example
A trader is excited after a large winning day.
The trader may feel prepared.
However, the excitement may lead to:
• Increased contract size
• Lower setup standards
• More trades
• The belief that another large day is likely
Labeling the emotion before the session can help the trader follow normal risk.
- Create a Readiness Score
A trader may use a simple readiness score from one to ten.
Example categories:
Sleep:
8 out of 10
Focus:
7 out of 10
Emotional stability:
9 out of 10
Financial pressure:
3 out of 10
Confidence in following rules:
8 out of 10
The purpose is not to create a perfect psychological measurement.
The score encourages the trader to pause before risking capital.
A personal rule may state:
If readiness is below a certain level, reduce risk or trade in simulation.
- Check the Trading Environment
Before analyzing price, confirm that the trading environment is working properly.
Check:
• Internet connection
• Trading platform
• Market data
• Chart time zone
• Correct contract month
• Order-entry settings
• Account selected
• Default contract quantity
• Bracket orders
• Stop-loss settings
• Profit-target settings
• Copy-trading connections
• Platform loss limits
A correct market idea entered on the wrong account or with the wrong quantity can create serious damage.
- Confirm the Correct Futures Contract
Futures contracts expire and trading activity moves into newer contract months.
A trader should confirm that the chart and trading platform are using the appropriate active contract.
Potential warning signs of using the wrong contract include:
• Lower volume
• Irregular movement
• Different prices across platforms
• Larger spreads
• Reduced liquidity
The active contract can change during rollover periods.
The trader should verify the current contract through reliable exchange, broker, or platform information rather than assuming an old symbol remains correct.
- Check Account Status
Before trading, confirm:
• Current account balance
• Current equity
• Current drawdown threshold
• Remaining drawdown room
• Daily loss room
• Current consistency status
• Maximum position size
• Whether the account is eligible to trade
• Whether a payout or account change affected the balance
This is especially important for evaluation and funded accounts.
A trader should not discover during a trade that the account had less available room than expected.
- Confirm Risk Before Chart Analysis
Risk should not be decided after the trader sees an attractive setup.
Before analyzing possible entries, record:
Risk per trade:
Maximum daily loss:
Maximum number of trades:
Maximum contract size:
Maximum open risk:
Trading start time:
Trading stop time:
These values should already exist in the risk plan.
Writing them before the session reinforces the boundaries.
- Review the Economic Calendar
The economic calendar shows scheduled events that may affect market volatility.
Examples can include:
• Inflation reports
• Employment reports
• Central-bank decisions
• Interest-rate announcements
• Economic-growth reports
• Consumer data
• Business surveys
• Treasury events
• Speeches from important policymakers
Scheduled events may cause:
• Rapid price movement
• Wider spreads
• Slippage
• False breakouts
• Liquidity sweeps
• Sudden reversals
A trader should know when major events are scheduled before entering.
- Verify the Calendar Each Day
The trader should not rely only on memory.
Economic events may occur:
• On different weekdays
• At different times
• During shortened holiday schedules
• With revisions
• Alongside unexpected announcements
Use a reliable economic calendar and confirm:
• Event name
• Release time
• Time zone
• Expected importance
• Markets likely to react
• Whether the trading plan permits holding through it
- Time Zones Matter
An economic calendar may display events in:
• Eastern Time
• Central Time
• Coordinated Universal Time
• The user’s local time
A trader who misreads the time zone may enter minutes before a major event without realizing it.
The calendar time zone should be confirmed before the session.
Example
Calendar event:
8:30 AM Eastern Time
A trader reading the calendar as Central Time may believe the event occurs one hour later.
The error could place the trader inside major volatility unexpectedly.
- High-Impact Versus Lower-Impact Events
Economic calendars often classify events by expected importance.
A higher-impact event may produce larger volatility.
A lower-impact event may produce little response.
However, impact labels do not guarantee the size of the market reaction.
A supposedly important event may create limited movement.
A less important release may create a large move if the result is unexpected.
The trader should follow the strategy’s news rules rather than assuming the calendar label predicts the exact reaction.
- News Rules Must Be Written
Possible news rules include:
• No new entries within a defined period before major news
• Close open positions before certain events
• Wait for volatility to settle after the release
• Trade only after a completed candle
• Avoid trading the entire session on major policy days
• Trade in simulation during unusually volatile conditions
The exact rules depend on:
• The strategy
• Account restrictions
• Stop distance
• Market traded
• Risk tolerance
The rule should be written before the event occurs.
- News Can Invalidate Premarket Levels
A major release can move price through several premarket levels quickly.
Before news, the trader may have marked:
• Support
• Resistance
• Session highs and lows
• Liquidity targets
After a major release, price may:
• Break the premarket range
• Create a new high or low
• Change the higher-timeframe structure
• Establish a new dealing range
• Invalidate the original bias
The trader should update the analysis when major new information changes price behavior.
- Scheduled News Versus Unexpected News
Scheduled news can be identified before the session.
Unexpected news cannot always be planned.
Examples of unexpected events may include:
• Geopolitical developments
• Emergency policy announcements
• Sudden company news
• Technical market disruptions
When price begins moving abnormally, the trader should not assume the normal setup remains valid.
The safest response may be:
• Reduce risk
• Avoid entry
• Close the platform
• Wait for conditions to stabilize
- Review the Weekly Context
Before focusing on intraday charts, review the broader weekly environment.
Questions may include:
Where is price relative to the weekly high and low?
Is the week currently expanding higher or lower?
Is price inside the previous week’s range?
Has the previous week high or low been taken?
Is price near a major weekly support or resistance area?
The weekly chart provides broad location.
It does not need to produce the exact entry.
- Review the Daily Context
The daily chart can help show:
• Recent trend
• Major swing highs and lows
• Previous day range
• Current week position
• Important support and resistance
• Whether price is extended
• Whether price is consolidating
The trader should avoid placing too many daily levels on an intraday chart.
Only levels relevant to current price and the trading plan should remain visible.
- Review the Four-Hour Structure
The four-hour chart may be used to identify the primary directional context.
Questions include:
Is price creating higher highs and higher lows?
Is price creating lower highs and lower lows?
Is price inside a large range?
Which high or low is protected?
What structure would need to break for the bias to change?
Where are the nearest major support and resistance areas?
The four-hour chart provides the larger framework for intraday movement.
- Review the One-Hour Structure
The one-hour chart can provide more detail about the current market condition.
The trader may identify:
• Recent swing highs
• Recent swing lows
• Current pullback
• Current consolidation
• Intraday support and resistance
• Important liquidity
• Whether price is approaching a major area
The one-hour structure may align with the four-hour chart or show a pullback against it.
- Timeframe Alignment
Timeframes are aligned when they support the same general direction.
Example:
Four-hour:
Bullish
One-hour:
Bullish
15-minute:
Bullish pullback ending
This may create clearer directional context.
Timeframes are not aligned when they show different short-term conditions.
Example:
Four-hour:
Bullish
One-hour:
Bearish pullback
15-minute:
Bearish
This does not automatically mean no trade is possible.
It means the trader must understand that lower-timeframe weakness may still be part of a larger bullish structure.
- Do Not Force Alignment
A trader should not ignore conflicting information to create a simple answer.
If the four-hour chart is bullish and the one-hour chart is bearish, record both.
Then explain the relationship.
Example:
“The four-hour market remains bullish, but the one-hour chart is pulling back. I will not assume continuation until the pullback reaches a meaningful location and buyers show evidence of returning.”
This is more useful than labeling every chart bullish simply because the trader wants a long.
- Identify the Market Condition
Before creating a directional scenario, classify the current market condition.
Possible conditions include:
• Bullish trend
• Bearish trend
• Bullish pullback
• Bearish retracement
• Horizontal range
• Consolidation
• Expansion
• Unclear transition
The expected behavior changes with the condition.
A trend may support continuation.
A range may support rotation between boundaries.
A transition may require more patience.
- Trending Market Preparation
In a bullish trend, the trader may prepare by identifying:
• Protected lows
• Support areas
• Discount portions of bullish ranges
• Buy-side liquidity targets
• Areas where continuation would become late
In a bearish trend, the trader may identify:
• Protected highs
• Resistance areas
• Premium portions of bearish ranges
• Sell-side liquidity targets
• Areas where continuation would become late
The trader should not assume the trend will continue without confirmation.
- Range Preparation
When price is inside a range, mark:
• Range high
• Range low
• Equilibrium
• Internal liquidity
• External liquidity
• Areas of repeated reaction
The trader should know whether the strategy permits:
• Trading from range boundaries
• Waiting for a breakout
• Waiting for a sweep and return
• Avoiding the middle completely
A range requires different expectations from a trend.
- Transition Preparation
A transition occurs when the market may be changing from one condition to another.
Examples include:
• Trend slowing into consolidation
• Range breaking into expansion
• Higher-timeframe structure weakening
• Price rejecting a major weekly level
During transition, the trader may remain neutral until stronger evidence appears.
Unclear conditions do not require a forced directional bias.
- Mark the Previous Day High
The previous day high is an important reference because it may act as:
• Buy-side liquidity
• Resistance
• A breakout level
• A target
• A location for rejection
Record whether the previous day high has already been traded through during the overnight session.
If it has already been taken, the level may still matter, but it is no longer untouched liquidity.
- Mark the Previous Day Low
The previous day low may act as:
• Sell-side liquidity
• Support
• A breakdown level
• A target
• A location for rejection
Again, record whether the level remains untouched.
The trader should not assume price must reach the previous day high or low during the current session.
- Mark the Previous Day Midpoint
The midpoint of the previous day range can provide location context.
Example:
Previous day high:
20,500
Previous day low:
20,100
Midpoint:
20,300
Current price:
20,380
Price is trading in the upper half of the previous day range.
This does not automatically create a bearish idea.
It helps describe location.
- Review the Previous Day’s Character
The previous day may have been:
• Strongly bullish
• Strongly bearish
• Ranging
• Highly volatile
• Low volume
• A news-driven reversal day
The previous day’s behavior can influence current expectations.
Example:
A strong bullish previous day followed by an overnight range may support continuation, deeper retracement, or consolidation.
The trader should observe what the current session confirms rather than assume the previous day must repeat.
- Mark the Overnight High and Low
The overnight session often creates a visible range before New York begins.
The trader may mark:
• Overnight high
• Overnight low
• Overnight midpoint
These levels may become:
• Liquidity targets
• Breakout levels
• Rejection areas
• Boundaries for New York expansion
- Mark Asia Session Levels
If the trading plan uses session information, mark:
• Asia high
• Asia low
• Asia range midpoint
Asia may create the initial overnight range.
Later sessions may:
• Remain inside it
• Sweep one side
• Break both sides
• Expand beyond it
The trader should use consistent session definitions.
- Mark London Session Levels
London may create:
• A new overnight high
• A new overnight low
• A sweep of Asia liquidity
• Directional movement before New York
Marking the London high and low can help the trader understand what New York is opening into.
- Mark the Premarket High and Low
The premarket range may represent the movement immediately before the regular stock-market session.
The trader may record:
• Premarket high
• Premarket low
• Premarket midpoint
• Whether the range is narrow or wide
• Whether news already caused expansion
The premarket range should be defined consistently in the trading plan.
- Session Definitions Must Remain Consistent
Different traders may use different start and end times for Asia, London, or premarket.
The exact definition matters less than using the same definition consistently during testing and execution.
Changing session times to make a level appear important can distort analysis.
- Mark Important Opens
Important opening prices may include:
• Futures session open
• Midnight open
• 9:30 AM open
• 10:00 AM open
Each open represents a reference price.
Price trading above an open may show acceptance of higher prices.
Price trading below an open may show acceptance of lower prices.
However, an open should not be used alone.
The trader should combine it with:
• Structure
• Location
• Liquidity
• Rejection or acceptance
• Current session behavior
- The Midnight Open
The midnight open can provide a reference for how price has traded during the current calendar day.
Questions include:
Is price above or below the midnight open?
Has price crossed it repeatedly?
Is the open acting as support or resistance?
Did overnight price move far away from it?
The midnight open may help organize context.
It is not an automatic entry.
- The 9:30 AM Open
The 9:30 AM Eastern Time stock-market open can produce a significant increase in volume and volatility.
The opening price may later act as:
• Support
• Resistance
• A balance point
• A reference for session direction
The opening movement can be unstable.
A trader should not assume that the first move from 9:30 represents the final direction.
- The 10:00 AM Open
The 10:00 AM open may become another intraday reference price.
Price may move away from it, return to it, reject it, or accept through it.
Tick Lab students should understand that an open is a reference level.
A complete model must define:
• Which movement matters
• What qualifies as a retest
• What confirmation is required
• When the setup is no longer valid
The free lesson does not treat the open as an automatic signal.
- Mark Major Support
Major support may include:
• Higher-timeframe swing lows
• Previous resistance that became support
• Lower range boundaries
• Previous day lows
• Weekly levels
• Areas of strong bullish reaction
The trader should keep support zones reasonably narrow and relevant.
A chart filled with support every few points does not provide clarity.
- Mark Major Resistance
Major resistance may include:
• Higher-timeframe swing highs
• Previous support that became resistance
• Upper range boundaries
• Previous day highs
• Weekly levels
• Areas of strong bearish reaction
The trader should note whether resistance has been tested repeatedly and whether reactions are becoming stronger or weaker.
- Rank the Levels
Not every level has equal importance.
A trader may organize levels into categories.
Major levels
• Weekly highs and lows
• Daily highs and lows
• Four-hour structure
• Large range boundaries
Intraday levels
• One-hour swings
• Session highs and lows
• Premarket boundaries
• Important opens
Minor levels
• Five-minute swings
• Internal liquidity
• Small consolidations
Ranking prevents a minor five-minute level from being treated as more important than a major four-hour area.
- Remove Irrelevant Levels
A level may be removed when:
• It is far from current price
• It has already been traded through repeatedly
• It no longer affects current structure
• It creates chart clutter
• The current session established a more relevant range
The purpose of marking levels is to improve decisions.
More lines do not automatically create better analysis.
- Map Buy-Side Liquidity
Possible buy-side liquidity may exist above:
• Previous day high
• Overnight high
• Asia high
• London high
• Premarket high
• Equal highs
• Major swing highs
• Current week high
The trader should identify which areas are:
• Untouched
• Already taken
• Minor
• Major
• Near current price
• Far from current price
- Map Sell-Side Liquidity
Possible sell-side liquidity may exist below:
• Previous day low
• Overnight low
• Asia low
• London low
• Premarket low
• Equal lows
• Major swing lows
• Current week low
Again, record which areas remain untouched.
- Liquidity Provides Possible Destinations
Liquidity can help the trader identify where price may be drawn.
It does not tell the trader which side will be reached first.
Suppose:
Buy-side liquidity:
20,400
Current price:
20,250
Sell-side liquidity:
20,100
Both areas are possible destinations.
The trader must compare:
• Higher-timeframe structure
• Current location
• Momentum
• Support and resistance
• Session behavior
• Distance to each level
• Whether one side was already taken
- Identify the Nearest Liquidity
The nearest liquidity may affect the available target.
Example:
Long entry area:
20,250
Nearest buy-side liquidity:
20,280
Stop distance:
20 points
Available target distance:
30 points
Risk-to-reward:
20:30
1:1.5
If the model requires a larger minimum reward, the trade may not qualify.
The nearest liquidity can limit the available opportunity.
- Identify Larger Liquidity Beyond the Nearest Level
Price may move through one minor level toward a larger liquidity objective.
Example:
Minor high:
20,280
Previous day high:
20,350
Weekly high:
20,420
The trader should not automatically assume price will reverse from the first high.
The hierarchy of liquidity helps explain why minor levels may be swept during a larger move.
- Mark the Current Dealing Range
Select the dealing range relevant to the current analysis.
Record:
Range high:
Range low:
Equilibrium:
Premium:
Discount:
Purpose of the range:
The range may be used for:
• Higher-timeframe location
• Current pullback
• Intraday setup context
The trader should not create random ranges until price appears favorable.
- Record Current Price Location
State clearly where price is trading.
Examples:
• Near higher-timeframe support
• Near resistance
• In discount of a bullish range
• In premium of a bearish range
• Near equilibrium
• At the top of a range
• At the bottom of a range
• In the middle of consolidation
Location should be described before the session begins.
- Extended Price
Price may be considered extended when it has moved a significant distance without a meaningful pullback.
Possible signs include:
• Several large directional candles
• Price far from equilibrium
• Price near major liquidity
• Price near higher-timeframe support or resistance
• Shallow corrections
An extended market can continue moving.
The trader should avoid assuming extension guarantees reversal.
Extension mainly warns that chasing may create poor location.
- Compressed Price
Price may be compressed when it is trading inside a narrow range with reduced movement.
Compression may indicate:
• Balance
• Waiting for news
• Accumulating orders
• Reduced volatility
• Potential future expansion
The trader should mark the boundaries and wait for evidence rather than entering repeatedly inside the compression.
- Measure the Overnight Range
The overnight range size can provide context.
Example:
Overnight high:
20,300
Overnight low:
20,200
Range size:
20,300 − 20,200 = 100 points
A narrow overnight range may create different New York behavior from an overnight session that already moved 400 points.
The trader should not assume one range size guarantees a specific outcome.
- Compare Current Volatility
Review recent candles and ranges.
Questions include:
Are current candles larger than normal?
Is the overnight range unusually wide?
Are price movements slow and overlapping?
Did news already create major expansion?
Volatility affects:
• Stop distance
• Position size
• Target expectations
• Slippage risk
• Whether the model fits current conditions
- Adjust Size, Not the Technical Stop
When volatility increases, the correct stop may become wider.
The trader should reduce position size rather than forcing the stop into an unrealistic location.
Example:
Normal stop:
15 points
Current required stop:
30 points
Normal risk:
$150
One MNQ contract risk:
30 × $2 = $60
Maximum whole contracts:
$150 ÷ $60 = 2.5
Round down:
Two MNQ contracts
The trader adapts size to market conditions.
- Define the Primary Bias
After reviewing structure and location, record a primary bias.
Possible labels include:
• Bullish
• Bearish
• Neutral
• Bullish above a specific level
• Bearish below a specific level
A conditional bias may be more useful than an absolute statement.
Example
“Bullish while price remains above the one-hour protected low and holds support.”
This statement explains what keeps the bias valid.
- Explain the Bias
The bias should include reasons.
Weak explanation:
“I think NQ is bullish.”
Stronger explanation:
“The four-hour chart is creating higher highs and higher lows. Price remains above the protected low and is pulling back into one-hour support. Buy-side liquidity remains above the previous day high.”
The explanation creates evidence that can later be reviewed.
- Identify Bias Invalidation
Every bias should include an invalidation condition.
Bullish invalidation may include:
• Break of the protected low
• Acceptance below support
• Strong bearish displacement
• Sustained lower highs and lower lows
Bearish invalidation may include:
• Break of the protected high
• Acceptance above resistance
• Strong bullish displacement
• Sustained higher highs and higher lows
The trader should know what evidence would require a change.
- Create a Bullish Scenario
A bullish scenario should explain the sequence required before a long can be considered.
A basic scenario may include:
-
Price reaches a premarked support or discount area.
-
Sell-side liquidity is accessed or selling pressure weakens.
-
Buyers create a clear reaction.
-
Bullish displacement or structure confirmation appears.
-
A logical stop and target are available.
The exact sequence depends on the trading model.
The scenario should be specific enough to prevent random long entries.
- Bullish Scenario Example
Higher-timeframe structure:
Bullish
Support:
20,100 to 20,130
Sell-side liquidity:
Below 20,100
Buy-side liquidity:
20,300
Bullish scenario:
“If price trades into the 20,100 to 20,130 support area, holds above the protected low, and produces clear bullish confirmation, a move toward buy-side liquidity at 20,300 may become relevant.”
The plan does not say to buy automatically at 20,120.
The trader waits for the market to confirm the scenario.
- Create a Bearish Scenario
A bearish scenario should explain the sequence required before a short can be considered.
A basic scenario may include:
-
Price reaches resistance or premium.
-
Buy-side liquidity is accessed or buying pressure weakens.
-
Sellers create a clear reaction.
-
Bearish displacement or structure confirmation appears.
-
A logical stop and target are available.
-
Bearish Scenario Example
Higher-timeframe structure:
Bearish
Resistance:
20,350 to 20,380
Buy-side liquidity:
Above 20,380
Sell-side liquidity:
20,150
Bearish scenario:
“If price retraces into the 20,350 to 20,380 resistance area, fails to maintain higher prices, and provides bearish confirmation, sell-side liquidity near 20,150 may become relevant.”
Again, the level is an observation area.
It is not an automatic short.
- Create an Alternative Scenario
The alternative scenario prepares the trader for evidence that contradicts the primary bias.
Example:
Primary bias:
Bullish
Alternative bearish scenario:
“If price breaks below support, closes below the protected low, and remains below it, the bullish scenario becomes invalid. A retest from below may support movement toward the next sell-side liquidity area.”
This prevents the trader from remaining emotionally attached to one direction.
- Create a Neutral Scenario
A neutral scenario may state:
“If price remains between the premarket high and low near equilibrium, no trade will be taken. I will wait for price to reach a range boundary or create acceptance outside the range.”
Neutral preparation is especially useful during consolidation.
- Use If-Then Language
If-then planning makes the premarket plan more actionable.
Examples:
If price reaches support and buyers confirm, then I may consider a long.
If price breaks support and accepts below it, then the bullish idea is invalid.
If price remains in the middle of the range, then I will stay flat.
If major news is approaching, then I will not enter.
If my maximum trade count is reached, then I will close the platform.
This language connects market conditions to predefined responses.
- Avoid Predictive Language
Avoid statements such as:
• Price has to go higher.
• The market will definitely sweep the high.
• NQ cannot break this support.
• Sellers have no chance today.
These statements encourage emotional attachment.
Use conditional language:
• Higher prices remain possible while support holds.
• The previous high is a possible liquidity target.
• Acceptance below support would weaken the bullish case.
- Define the Setup Window
A setup may only be valid during a specific period.
Record:
Trading start time:
Trading end time:
No-entry periods:
News restrictions:
A setup appearing after the window may be visually attractive but outside the tested process.
- Define the Entry Requirements
The premarket plan should state what must be present before entry.
Possible categories include:
• Higher-timeframe context
• Meaningful location
• Liquidity event
• Candle close
• Displacement
• Structure confirmation
• Acceptable risk-to-reward
The exact checklist belongs to the tested model.
Beginners should understand that one concept alone is not a complete entry.
- Define Invalidation Before Entry
The trader should know where the setup becomes wrong before placing the order.
Questions include:
Which high or low must hold?
Does a wick invalidate the idea or is a close required?
Is the stop beyond a zone or a swing?
What price behavior would prove the reaction failed?
The stop should reflect this invalidation.
- Define the Target Before Entry
Possible targets may include:
• Previous swing high or low
• Session high or low
• Previous day high or low
• Range boundary
• Untouched liquidity
• Important opening price
The target should be realistic.
The trader should also note obstacles between entry and target.
- Check Risk-to-Reward
Before the session begins, estimate potential risk-to-reward from the planned areas.
Example:
Potential long entry:
20,120
Possible stop:
20,090
Risk:
30 points
Possible target:
20,240
Reward:
120 points
Risk-to-reward:
1:4
This is only an estimate.
The exact entry and stop may change when the setup forms.
The calculation helps determine whether the planned location has enough room.
- Identify No-Trade Conditions
No-trade conditions should be written before the session.
Examples include:
• Price in the middle of a range
• Heavy candle overlap
• Conflicting higher-timeframe structure
• Major news approaching
• Required confirmation absent
• Poor risk-to-reward
• Setup outside the trading window
• Daily loss limit reached
• Platform or data problems
• Emotional readiness too low
A no-trade rule is only useful if it is followed.
- Middle-of-Range Rule
If price is near equilibrium inside a large range, the trader may decide to avoid entry.
The middle can create:
• Unclear direction
• Distant invalidation
• Limited target room
• Repeated reversals
The trader may wait for price to reach:
• Range support
• Range resistance
• External liquidity
• A confirmed breakout
- Already-Moved Rule
The trader may create a rule for situations where price reaches the expected target before the trading window or before confirmation appears.
Example:
“If buy-side liquidity is already taken before my setup forms, I will not chase the original directional idea without a new range and new target.”
This prevents the trader from entering after the main objective has already been reached.
- Wide-Range Rule
If the overnight or news range is unusually wide, the trader may:
• Reduce size
• Wait for a deeper pullback
• Avoid chasing
• Trade only one attempt
• Remain in simulation
The exact rule should come from tested data.
- Low-Volatility Rule
During very low volatility, the trader may experience:
• Small targets
• False breakouts
• Heavy overlap
• High commission impact
The trader may require:
• Clearer expansion
• A range-bound strategy
• Reduced expectations
• No trade
Low volatility is not automatically easier.
- Correlated-Market Review
Some traders review related markets for context.
For NQ and ES, the trader may observe whether both are:
• Trending in the same direction
• Reaching important levels
• Showing different strength
• Breaking structure differently
This information can provide context.
It should not replace the setup.
A trader should avoid opening many additional charts that create confusion without improving decisions.
- Review Market Breadth or Other Context Carefully
Advanced traders may review additional information such as:
• Market breadth
• Bond yields
• Currency movement
• Volatility indexes
• Major stock performance
These tools may provide context.
They can also create information overload.
Tick Lab beginners should first master:
• Price structure
• Levels
• Liquidity
• Location
• Risk
Additional information should only be added when it has a defined role and has been tested.
- Build a Clean Chart
Before the session, the chart should contain only relevant information.
A clean chart may show:
• Major support
• Major resistance
• Session highs and lows
• Important opens
• Liquidity areas
• Current dealing range
• Protected high or low
Remove:
• Old drawings
• Irrelevant indicators
• Duplicate levels
• Lines with no current purpose
The chart should make decisions easier, not harder.
- Use Consistent Visual Organization
The trader may use consistent line styles or labels for:
• Higher-timeframe levels
• Session levels
• Opens
• Liquidity
• Support and resistance
The exact colors do not matter as much as consistency.
A level should be identifiable without needing to guess what it represents.
- Save a Premarket Screenshot
Before the session begins, save a screenshot showing:
• Higher-timeframe levels
• Current price
• Bias
• Bullish scenario
• Bearish scenario
The screenshot creates a record of what the trader knew before the session.
It prevents hindsight from changing the original analysis.
- Write a Premarket Narrative
A narrative is a short paragraph explaining the market situation.
Example:
“NQ remains in bullish four-hour structure but is currently pulling back on the one-hour chart. Price is below the previous day high and above a protected one-hour low. The overnight session formed a narrow range, with buy-side liquidity above the London high and sell-side liquidity below the Asia low. My primary idea is bullish only if price holds the marked support zone and provides confirmation. Acceptance below support would shift the session toward a neutral or bearish scenario.”
The narrative connects individual chart markings into one organized explanation.
- Keep the Narrative Objective
The narrative should describe evidence.
Avoid emotional language such as:
• This setup looks amazing.
• NQ is definitely going to explode.
• Sellers are trapped and have no chance.
Use objective language:
• Price remains above the protected low.
• Buy-side liquidity is located above the previous high.
• The one-hour chart is pulling back.
• Acceptance below support would weaken the bullish idea.
- Write the Exact Risk Plan
A premarket risk section may include:
Risk per trade:
Maximum trades:
Maximum daily loss:
Maximum position size:
Maximum open risk:
Second-trade rule:
Cooldown rule:
Stop-trading time:
This section should remain visible during execution.
- Calculate Contract Size in Advance
If several stop distances are common, the trader can prepare a position-size reference.
Example for MNQ with $150 maximum risk
10-point stop:
One contract risks $20
Maximum contracts:
Seven contracts risk $140
15-point stop:
One contract risks $30
Maximum contracts:
Five contracts risk $150
20-point stop:
One contract risks $40
Maximum contracts:
Three contracts risk $120
25-point stop:
One contract risks $50
Maximum contracts:
Three contracts risk $150
30-point stop:
One contract risks $60
Maximum contracts:
Two contracts risk $120
This reduces calculation pressure during the session.
The trader should still verify the exact numbers before entry.
- Prepare for the First Loss
Before trading begins, mentally rehearse what will happen if the first trade loses.
Example:
“If Trade 1 loses, I will record the result, leave the screen for 15 minutes, and take another trade only if a new independent setup appears. I will not increase size.”
This makes the loss part of the plan rather than an unexpected emotional event.
- Prepare for the First Win
Also rehearse what will happen if the first trade wins.
Example:
“If Trade 1 wins, I will not immediately enter again. I will review whether another independent setup exists and whether my trade-count rule permits participation.”
Winning can create overtrading as easily as losing.
- Prepare for No Trade
Write:
“If no valid setup appears, the correct result is no trade.”
This statement reduces pressure to justify the preparation with an entry.
The work is still valuable because it protects the account.
- Review the Plan Before the Open
Immediately before the trading window begins, review:
• Economic-event times
• Primary bias
• Alternative scenario
• Major support
• Major resistance
• Buy-side liquidity
• Sell-side liquidity
• No-trade conditions
• Risk per trade
• Maximum trades
The review should be short.
The deeper analysis should already be complete.
- Do Not Add New Analysis During Opening Volatility Without Reason
When the session opens, the trader may see rapid movement and begin adding many new levels.
The trader should first observe how price behaves around the existing plan.
New levels may be added when the market creates meaningful new structure.
They should not be added simply because the trader wants to enter.
- Observe the Open
During the opening period, observe:
• Which side of the overnight range is approached
• Whether price accepts or rejects the 9:30 open
• Whether opening movement has follow-through
• Whether major levels hold
• Whether news volatility continues
• Whether the opening move aligns with the higher-timeframe scenario
Observation is not inactivity.
It is information collection.
- Do Not Assume the First Move Is Real
The opening move may:
• Continue
• Reverse
• Sweep liquidity
• Return to the open
• Expand both directions
A trader should wait for the model’s required evidence.
Entering only because the first candle is large is not preparation-based execution.
- Update the Plan Only When Evidence Changes
A plan should be flexible, but it should not change with every candle.
Valid reasons to update include:
• Protected structure breaks
• Price accepts beyond a major level
• Major news changes the range
• The primary liquidity target is reached
• A new higher-timeframe swing forms
Invalid reasons include:
• One candle changes color
• The trader missed an entry
• The trader wants another trade
• The current bias feels uncomfortable
- Use a Live Decision Log
During the session, briefly record important observations.
Example:
9:35 AM:
Price remains inside premarket range. No setup.
9:55 AM:
Sell-side liquidity below premarket low taken. Waiting for confirmation.
10:05 AM:
Price returned above support, but no displacement. No entry.
10:15 AM:
Bullish confirmation completed. Risk-to-reward valid.
This log helps the trader remain connected to the plan.
- Separate Observation From Interpretation
Observation:
Price traded below the premarket low.
Interpretation:
Sell-side liquidity may have been accessed.
Conclusion:
No long is valid until price shows rejection and confirmation.
The trader should avoid moving directly from observation to entry.
Each step requires evidence.
- End-of-Preparation Checklist
Before entering any trade, confirm:
• I checked the economic calendar.
• I know the next important event time.
• I reviewed the weekly, daily, four-hour, and one-hour context.
• I identified whether the market is trending, ranging, or transitioning.
• I marked the previous day high and low.
• I marked relevant session highs and lows.
• I marked important opens.
• I identified support and resistance.
• I mapped buy-side and sell-side liquidity.
• I selected the relevant dealing range.
• I know whether price is in premium, discount, or equilibrium.
• I wrote a primary bias.
• I wrote an alternative scenario.
• I defined bias invalidation.
• I defined bullish and bearish conditions.
• I wrote no-trade conditions.
• I confirmed risk per trade.
• I confirmed maximum daily loss.
• I confirmed maximum trade count.
• I confirmed the trading window.
• I am mentally and physically prepared.
• The setup currently meets the full model.
Common Beginner Mistake
“I did my premarket analysis, so I need to trade my bias.”
Imagine a trader completes the following preparation:
Four-hour structure:
Bullish
Support:
20,100 to 20,130
Buy-side liquidity:
20,300
Primary bias:
Bullish
The trader decides the market should move higher.
At the New York open, price breaks below:
20,100
A strong bearish candle closes at:
20,060
The next candle remains below support.
Price retests:
20,100
and rejects lower.
The trader still enters long because the premarket bias was bullish.
The trader believes changing direction would mean the analysis was wrong.
The mistake is treating the bias as an instruction instead of a conditional idea.
The original bullish scenario required support to hold.
Support failed.
Price accepted below it.
The market provided new information.
A prepared trader should say:
“My bullish scenario is invalid. I will remain neutral or evaluate the bearish alternative.”
Premarket preparation is not a promise to trade the original direction.
It is a plan for responding when conditions are met or invalidated.
Practical Example
Imagine a trader is preparing to trade MNQ during the New York morning.
Personal readiness
Sleep:
Eight hours
Emotional state:
Calm
Financial pressure:
Low
Readiness score:
Eight out of ten
Account information
Current account equity:
$52,500
Current threshold:
$50,500
Total room:
$2,000
Desired buffer:
$1,000
Usable risk room:
$1,000
Risk plan
Risk per trade:
Maximum $120
Maximum trades:
Two
Maximum daily loss:
$240 before costs
Second trade:
Allowed only after a loss and only with a new valid setup
Trading window:
9:30 AM to 11:30 AM Eastern Time
Economic calendar
Major event:
Scheduled at 8:30 AM Eastern Time
No additional major event is scheduled inside the trading window.
The trader waits for the 8:30 release before finalizing levels because the news may change the premarket range.
Weekly context
Current week high:
20,600
Current week low:
20,000
Current price:
20,340
Price is in the upper half of the weekly range.
Daily context
Previous day high:
20,500
Previous day low:
20,100
Previous day midpoint:
20,300
Current price:
20,340
Price is slightly above the previous day midpoint.
Four-hour structure
Major swing low:
20,000
Swing high:
20,450
Higher low:
20,180
New high:
20,520
The four-hour structure remains bullish.
Protected four-hour low
20,180
One-hour structure
Price is pulling back from:
20,520
Recent one-hour support:
20,280 to 20,310
Recent one-hour swing low:
20,260
The one-hour chart is in a bearish pullback inside the larger bullish structure.
Overnight levels
Asia high:
20,410
Asia low:
20,250
London high:
20,440
London low:
20,290
Premarket high:
20,455
Premarket low:
20,270
Important opens
Midnight open:
20,315
Current price:
20,340
Price is above the midnight open.
Liquidity map
Buy-side liquidity:
• Premarket high at 20,455
• Previous day high at 20,500
• Four-hour high at 20,520
• Weekly high at 20,600
Sell-side liquidity:
• London low at 20,290
• Premarket low at 20,270
• One-hour swing low at 20,260
• Protected four-hour low at 20,180
Current bullish dealing range
Range low:
20,180
Range high:
20,520
Range size
20,520 − 20,180 = 340 points
Equilibrium
340 ÷ 2 = 170 points
20,180 + 170 = 20,350
Premium
20,350 to 20,520
Discount
20,180 to 20,350
Current price
20,340
Price is slightly inside discount and near equilibrium.
Primary bias
Bullish while price remains above the one-hour support area and the protected higher-timeframe low.
Reasons
• Four-hour higher highs and higher lows
• Protected low remains intact
• Price is near one-hour support
• Price is above the midnight open
• Buy-side liquidity remains above the previous day high
Bullish scenario
“If price trades into the 20,280 to 20,310 support area, rejects lower prices, and provides bullish confirmation, a move toward the premarket high at 20,455 and previous day high at 20,500 may become relevant.”
Bearish alternative
“If price breaks below 20,260, closes below the one-hour swing low, and remains below it, the bullish continuation scenario weakens. A retest from below may support movement toward the protected four-hour low at 20,180.”
Neutral scenario
“If price remains between 20,320 and 20,390 near equilibrium with heavy overlap, no trade will be taken.”
No-trade conditions
• Price remains near equilibrium without confirmation
• Risk-to-reward is below the required minimum
• Entry appears after 11:30 AM
• Two trades have already been taken
• Daily loss limit is reached
• Price reaches the primary target before a valid entry forms
9:30 AM Open
Price opens at:
20,350
The first candle moves to:
20,390
The trader does not enter because price is near equilibrium and has not reached the planned support.
9:40 AM
Price moves to:
20,430
The trader feels FOMO because the bullish bias appears correct.
However:
• Price is approaching the premarket high
• The planned support entry did not occur
• Available reward is decreasing
No trade is taken.
9:50 AM
Price reaches:
20,460
Buy-side liquidity above the premarket high is taken.
Price then begins moving lower.
10:05 AM
Price reaches:
20,300
The one-hour support zone is reached.
Initial reaction
Price produces a small bullish candle.
However, the candle has heavy overlap and no follow-through.
The trader waits.
10:15 AM
Price trades below:
20,290
and reaches:
20,275
Sell-side liquidity below the London low is accessed.
A five-minute candle closes at:
20,315
The following candle creates bullish displacement and closes at:
20,355
A lower-timeframe swing high at:
20,340
is broken.
Trade evaluation
Higher-timeframe bias:
Bullish
Location:
One-hour support and discount
Liquidity:
Sell-side liquidity taken
Confirmation:
Bullish displacement and lower-timeframe structure break
Possible entry:
20,345
Possible stop:
20,270
Stop distance:
75 points
The stop is too wide for the preferred risk and current entry.
Position-size review
One MNQ contract risk:
75 × $2 = $150
Maximum risk:
$120
Even one MNQ contract would exceed the planned risk.
The trader does not enter at 20,345.
Possible pullback
Price later pulls back to:
20,315
A new technical stop may be placed at:
20,275
Stop distance:
40 points
One MNQ contract risk
40 × $2 = $80
Maximum whole-number contracts under $120
$120 ÷ $80 = 1.5
Maximum position:
One MNQ contract
Potential target
Previous day high:
20,500
Reward distance
20,500 − 20,315 = 185 points
Potential monetary reward
185 × $2 = $370
Risk-to-reward
40 points risk to 185 points reward
Approximately:
1:4.6
Trade
The trader enters one MNQ contract at:
20,315
Stop:
20,275
Target:
20,500
What did the premarket preparation accomplish?
The trader:
• Knew the higher-timeframe bias
• Avoided chasing the opening rally
• Waited for the planned support area
• Recognized that the first reaction was weak
• Waited for liquidity and confirmation
• Refused an entry whose stop exceeded risk
• Recalculated size after a better entry formed
• Identified a realistic target before entering
The preparation did not predict every candle.
It created boundaries for responding to the session.
Knowledge Check
Question 1
What is the main purpose of premarket preparation?
A. To predict every candle
B. To organize important decisions before the market becomes emotionally demanding
C. To guarantee a winning trade
D. To create as many levels as possible
Answer: B
Question 2
Which statement is correct?
A. A bias is a guarantee.
B. A premarket plan should prepare the trader for multiple outcomes.
C. The trader must trade the primary bias.
D. Alternative scenarios create confusion.
Answer: B
Question 3
Why should personal readiness be reviewed?
A. Physical and emotional conditions can affect execution quality.
B. Sleep changes contract specifications.
C. Readiness guarantees the setup wins.
D. Personal condition does not affect trading.
Answer: A
Question 4
What should be checked before entering the market?
A. Only the current candle
B. Platform, data, account, risk, and order settings
C. Social-media predictions
D. The previous trade’s profit only
Answer: B
Question 5
Why should the economic calendar be reviewed?
A. Scheduled events may create volatility and affect trade rules.
B. Every event guarantees a reversal.
C. News removes liquidity.
D. Economic calendars provide exact targets.
Answer: A
Question 6
Why must the calendar time zone be confirmed?
A. An incorrect time zone can cause the trader to misread when an event occurs.
B. Time zones change contract point values.
C. News only happens in Eastern Time.
D. The market closes when the time zone changes.
Answer: A
Question 7
Which timeframe commonly provides broader context?
A. Four-hour or daily
B. One tick only
C. Order-entry screen
D. Account balance chart
Answer: A
Question 8
Can the four-hour chart be bullish while the one-hour chart is bearish?
A. No
B. Yes, the one-hour movement may be a pullback inside the larger bullish structure.
C. Only during holidays
D. Only when price is at equilibrium
Answer: B
Question 9
What should be marked from the previous day?
A. Only the closing candle color
B. High, low, and potentially the midpoint
C. Every one-minute candle
D. Only total volume
Answer: B
Question 10
Why are session highs and lows useful?
A. They may act as liquidity, support, resistance, or breakout areas.
B. They guarantee reversals.
C. They remove the need for stops.
D. They are always the final daily high and low.
Answer: A
Question 11
What does liquidity mapping provide?
A. Possible price destinations
B. Automatic entries
C. Guaranteed reversals
D. Fixed position size
Answer: A
Question 12
Why should levels be ranked?
A. Not every level has equal timeframe importance.
B. Minor levels always control major structure.
C. More lines always improve analysis.
D. Ranking changes market direction.
Answer: A
Question 13
What should a directional bias include?
A. Only bullish or bearish
B. Evidence and an invalidation condition
C. A guaranteed target
D. The trader’s desired profit
Answer: B
Question 14
What is an alternative scenario?
A. A random second strategy
B. A prepared response if evidence contradicts the primary idea
C. A revenge trade
D. A larger position
Answer: B
Question 15
Why is if-then language useful?
A. It connects specific market conditions to predefined actions.
B. It guarantees the condition occurs.
C. It removes the need for confirmation.
D. It increases trading frequency.
Answer: A
Question 16
What is a no-trade condition?
A. A market or personal condition under which the trader will remain flat
B. A requirement to trade smaller size
C. A guaranteed losing setup
D. A session high
Answer: A
Question 17
Why should risk be defined before the setup appears?
A. An attractive setup may cause the trader to justify excessive size.
B. Risk is unimportant before entry.
C. Contract value changes after analysis.
D. The trader should always use maximum size.
Answer: A
Question 18
What should happen if the technical stop exceeds the risk limit?
A. Move the stop closer randomly.
B. Reduce size, wait for a better entry, or skip the trade.
C. Remove the stop.
D. Increase the daily loss limit.
Answer: B
Question 19
Does completing premarket analysis require the trader to take a trade?
A. Yes
B. No
C. Only on NQ
D. Only when the bias is bullish
Answer: B
Question 20
When should the premarket plan be updated?
A. After every candle changes color
B. When meaningful new evidence changes structure, levels, or market conditions
C. When the trader misses an entry
D. When the trader wants another setup
Answer: B
Lesson Assignment
Complete this assignment before moving to Lesson 15.
Part 1: Define the Terms
Write one or two sentences explaining each term in your own words:
• Premarket preparation
• Primary bias
• Alternative scenario
• Bias invalidation
• Economic calendar
• Market condition
• Session range
• Protected high
• Protected low
• No-trade condition
• Trading window
• If-then plan
Part 2: Build a Personal Readiness Check
Before five sessions, record:
Sleep quality:
Physical condition:
Emotional condition:
Financial pressure:
Focus level:
Confidence in following rules:
Overall readiness score:
Then answer:
Should I trade normal size?
Should I reduce risk?
Should I trade in simulation?
Should I avoid trading?
Part 3: Platform and Account Check
Create a checklist containing:
• Correct trading account
• Correct contract month
• Live or simulated account confirmed
• Market data active
• Chart time zone correct
• Order quantity correct
• Stop-loss bracket active
• Profit-target bracket active
• Copy trader connected correctly
• Pending orders reviewed
• Current equity recorded
• Current threshold recorded
• Remaining drawdown room calculated
• Daily loss room calculated
Part 4: Economic Calendar Review
For five trading days, record:
Date:
Event name:
Release time:
Time zone:
Expected importance:
Market reaction:
Did price expand?
Did price reverse?
Did price sweep both sides?
Did the event change the premarket range?
Did I follow my news rule?
Part 5: Higher-Timeframe Analysis
Choose one completed session.
Record:
Weekly trend or range:
Weekly high:
Weekly low:
Daily structure:
Previous day high:
Previous day low:
Previous day midpoint:
Four-hour structure:
Protected four-hour high:
Protected four-hour low:
One-hour structure:
Current pullback or expansion:
Then explain the relationship among the timeframes in one paragraph.
Part 6: Session-Level Map
For one completed day, record:
Asia high:
Asia low:
London high:
London low:
Overnight high:
Overnight low:
Premarket high:
Premarket low:
Midnight open:
9:30 AM open:
10:00 AM open:
Which levels remained untouched before New York?
Which levels were taken first?
Which level produced the strongest reaction?
Part 7: Liquidity Map
Before one session, identify:
Three buy-side liquidity areas
Three sell-side liquidity areas
For each area, record:
Level:
Timeframe:
Type of liquidity:
Untouched or taken:
Minor or major:
Distance from current price:
Possible obstacle before price reaches it:
Part 8: Dealing Range Review
Record:
Range purpose:
Timeframe:
Range high:
Range low:
Total range:
Equilibrium:
Premium:
Discount:
Current price location:
Is price near support, resistance, or the middle?
Is the range still valid?
What would invalidate it?
Part 9: Create a Primary Bias
Complete:
Primary bias:
Higher-timeframe evidence:
Current market condition:
Protected high:
Protected low:
Major support:
Major resistance:
Liquidity supporting the idea:
Current price location:
Bias invalidation:
Then write a paragraph explaining the bias without using predictive language such as “must,” “will,” or “guaranteed.”
Part 10: Build Three Scenarios
Bullish scenario
Required location:
Liquidity condition:
Required confirmation:
Invalidation:
Primary target:
Minimum risk-to-reward:
Bearish scenario
Required location:
Liquidity condition:
Required confirmation:
Invalidation:
Primary target:
Minimum risk-to-reward:
Neutral scenario
Range or unclear area:
Conditions requiring no trade:
Evidence required before direction becomes clearer:
Part 11: Write Ten If-Then Rules
Examples:
If price remains in the middle of the range, then…
If price reaches support without confirmation, then…
If price breaks the protected low, then…
If major news is less than a certain time away, then…
If the main liquidity target is reached before entry, then…
If the stop distance exceeds my risk limit, then…
If my first trade loses, then…
If my maximum trade count is reached, then…
If the trading window closes, then…
If no setup forms, then…
Part 12: Position-Size Preparation
Choose your normal maximum risk.
Create a reference table for:
• 10-point stop
• 15-point stop
• 20-point stop
• 25-point stop
• 30-point stop
• 40-point stop
• 50-point stop
Calculate the maximum MNQ or MES contracts for each stop.
Always round down when the next contract exceeds the risk limit.
Part 13: Premarket Narrative
Write one paragraph before each of five sessions.
Include:
• Higher-timeframe structure
• Current one-hour condition
• Current price location
• Important support and resistance
• Buy-side and sell-side liquidity
• Primary bias
• Alternative scenario
• Bias invalidation
After the session, review whether the narrative accurately described the information available before the open.
Part 14: Save Before-and-After Screenshots
For five days, save:
Screenshot 1:
Premarket chart with all levels and scenarios
Screenshot 2:
Chart after the trading window closes
Compare:
Which levels mattered?
Which levels were ignored?
Did price follow the primary or alternative scenario?
Did hindsight change how the setup looked?
Did the premarket plan prevent a bad trade?
Part 15: Five-Day Premarket Routine Journal
For five trading days, record:
• Personal readiness
• Platform checked
• Account status checked
• Economic calendar reviewed
• Weekly context
• Daily context
• Four-hour structure
• One-hour structure
• Market condition
• Previous day high and low
• Asia high and low
• London high and low
• Premarket high and low
• Important opens
• Support
• Resistance
• Buy-side liquidity
• Sell-side liquidity
• Dealing range
• Premium, discount, or equilibrium
• Primary bias
• Alternative scenario
• Bias invalidation
• Bullish scenario
• Bearish scenario
• Neutral scenario
• No-trade conditions
• Risk per trade
• Maximum trades
• Maximum daily loss
• Trading window
After each session, record:
• Which scenario occurred
• Whether the plan changed
• Why the plan changed
• Whether the entry was planned
• Whether the setup met all conditions
• Whether the trade was chased
• Whether the risk calculation was correct
• Whether a no-trade decision protected the account
At the end of five days, answer:
Which parts of the routine improved my decisions?
Which levels were consistently useful?
Which levels created unnecessary clutter?
Did I become attached to the primary bias?
Did alternative scenarios help me adapt?
Did I check news consistently?
Did I trade before confirmation?
Did preparation reduce overtrading?
What part of the routine needs improvement?
Key Takeaways
• Premarket preparation moves important decisions away from fast and emotional market conditions.
• Preparation reduces improvisation.
• A premarket plan is not a prediction.
• The plan should prepare the trader for several possible outcomes.
• A repeatable routine produces more consistent decisions and data.
• Personal readiness should be evaluated before risking capital.
• Physical and emotional conditions can affect execution quality.
• The platform, account, contract, data, and order settings should be checked before trading.
• The economic calendar should be reviewed every day.
• Event times and time zones must be verified.
• News can create volatility, slippage, false breaks, and new market structure.
• Scheduled news rules should be written before the event occurs.
• The weekly and daily charts provide broad location.
• The four-hour chart can provide higher-timeframe structure.
• The one-hour chart can provide recent structure and pullback context.
• Different timeframes may show different conditions at the same time.
• The current market should be classified as trending, ranging, consolidating, expanding, or transitioning.
• Previous day highs and lows may act as liquidity, support, resistance, or targets.
• Session highs and lows help organize overnight and New York price behavior.
• Important opening prices provide reference levels but are not automatic signals.
• Major and minor levels should be ranked.
• Irrelevant levels should be removed.
• Buy-side and sell-side liquidity provide possible destinations.
• Liquidity does not determine which side will be reached first.
• The nearest liquidity may limit available reward.
• Larger liquidity may exist beyond minor highs and lows.
• A relevant dealing range helps describe current price location.
• Premium and discount should be connected to the selected range and timeframe.
• Extended price may continue but can create poor entry location.
• Compression may precede expansion but does not determine direction.
• Volatility affects stops, size, targets, and execution risk.
• Position size should adapt to the correct technical stop.
• A bias should contain evidence and an invalidation condition.
• Bullish, bearish, and neutral scenarios should be prepared.
• If-then language connects market conditions with predefined responses.
• Predictive and absolute language can create emotional attachment.
• Trading windows and entry requirements should be defined before the session.
• Stops and targets should be planned before entry.
• Risk-to-reward should reflect realistic market levels.
• No-trade conditions are an essential part of preparation.
• The trader should prepare for a loss, a win, and no trade.
• A premarket screenshot creates an objective record.
• A written narrative connects individual levels into one organized market explanation.
• The risk plan should remain visible during execution.
• Position-size references can reduce calculation pressure.
• Opening volatility should be observed before being trusted.
• The first market move does not always represent the final direction.
• The plan should change only when meaningful evidence changes.
• Observation should be separated from interpretation and entry.
• Completing premarket analysis does not require taking a trade.
• A successful preparation process may end with no position and no financial risk.
Final Lesson Reminder
Before the market opens, ask:
Am I physically and emotionally prepared?
Did I check the correct account and contract?
What is my current drawdown room?
What is my risk per trade?
What is my maximum daily loss?
How many trades am I allowed to take?
What economic events are scheduled?
What time zone is the calendar using?
What is the weekly context?
What is the daily context?
What is the four-hour structure?
What is the one-hour condition?
Is the market trending, ranging, or transitioning?
Where are the previous day high and low?
Where are the session highs and lows?
Where are the important opens?
Where is major support?
Where is major resistance?
Where is buy-side liquidity?
Where is sell-side liquidity?
What dealing range am I using?
Is price in premium, discount, or equilibrium?
What supports my primary bias?
What invalidates my bias?
What is my bullish scenario?
What is my bearish scenario?
What is my neutral scenario?
What conditions require no trade?
Where must price go before I become interested?
What confirmation must appear?
Where is the invalidation point?
Is there enough room to a realistic target?
The trader’s job is not to predict the entire session before it begins.
The trader’s job is to prepare for the important possibilities and wait until the market provides the required evidence.
Preparation creates the plan.
Patience protects the plan.
Execution follows only when the conditions are present.
In Lesson 15, you will learn how to backtest properly, define an objective test, select a useful sample, avoid changing rules in hindsight, record results accurately, and determine whether a trading idea has enough evidence to justify further testing.
Educational Disclaimer
Tick Lab is provided for educational and informational purposes only. Nothing in this lesson should be interpreted as financial advice, investment advice, or a guarantee of trading results. Futures trading involves substantial risk and may not be suitable for everyone. Economic events, market hours, futures contracts, broker requirements, and prop-firm rules can change. Always verify current information through reliable official sources and consider practicing your premarket routine in a simulated environment before risking real capital.