Preparing a trading plan before the stock market opens would appear to be essential for a hedge fund manager or any serious trader. After all, a well-thought-out trading plan could help you make informed decisions and manage risk effectively. Here are the key steps and considerations to include in that plan:

1. Market Analysis:

   • Economic Calendar: Review the economic calendar for the day to be aware of any significant economic events, announcements, or data releases that could impact the market. Even if you are not trading events, you should be aware of where the volatility is to be expected.

2. Asset Selection:

   • Determine which assets (stocks, options, bonds, etc.) you want to trade. This decision should be based on your fund’s strategy and research. For most fund managers, this would not be done on a daily basis.

3. Risk Management:

   • Set stop-loss and take-profit levels for your trades to limit potential losses and secure profits.
   • Calculate position size based on your risk tolerance and account size. Ensure you adhere to the 1-2% risk rule.

4. Technical Analysis:

   • Review technical indicators such as moving averages, RSI, MACD, and chart patterns to identify potential entry and exit points. Most importantly, is the market you are trading trending upwards or downwards?

5. Fundamental Analysis:

   • Assess the fundamental health of the companies or assets you plan to trade. This could involve examining earnings reports, news, and industry trends. Don’t settle for just having CNBC on in the background.

6. News and Sentiment Analysis:

   • Stay updated on market news and sentiment. This can help you gauge the general market mood and any potential external factors that may affect your trades. All information is priced in. But you should know what others know.

7. Global Events:

   • Consider how global events (e.g., geopolitical developments, central bank actions) might influence the markets. This has been the main show this year.

8. Market Sentiment:

   • Monitor market sentiment through tools like the CBOE Volatility Index (VIX) and social media sentiment analysis. Yes, you will have to follow X and Substacks without getting derailed.

9. Set Goals:

   • Define your daily, weekly, and monthly trading goals, including profit targets. Realistically, I guess setting the maximum losses is more relevant for most traders.

10. Trade Execution Strategy:

    • Determine the specific entry and exit points for your trades. Use limit orders or market orders as per your strategy. This should actually be a bit higher on the list. You should also consider if you want to trade outside of market hours.

11. Contingency Plans:

    • Prepare for unexpected market moves with contingency plans. Decide how you’ll respond to sudden adverse events.

12. Technology Check:

    • Ensure your trading platform, internet connection, and backup systems are functioning correctly. (I personally use a mobile phone connection as a back-up.)

13. Review Previous Trades:

    • Analyze past trades for lessons learned and areas of improvement. Unless you did it already while munching on cookies and sipping milk last night.

14. Collaboration:

    • If you have a team, discuss the trading plan with your colleagues. Make sure everyone is on the same page.

15. Psychological Preparation:

    • Mentally prepare for the trading day. Maintain discipline, control emotions, and stick to your plan.

16. Optional – Documentation:

    • Keep a trading journal to document your plan, the reasons behind your trades, and the outcomes.

17. Review at Close:

    • After the market closes, review your trades, assess your performance, and make necessary adjustments to your plan. If your emotional state fluctuates with the markets – find another job.

The specifics of your trading plan will depend on your strategy, risk tolerance, and investment horizon. Flexibility is key, as market conditions can change rapidly. Regularly update and adjust your plan as needed, and continuously analyze and learn from your trading decisions to improve your strategy over time. Find your own trading style that suits you. If you are loosing, stop doing what you were doing. If you are winning, do not change anything (!)