Pretend the market open is 12 midnight.
Prior to the market open, see how Asia has traded and how U.S. stock index futures traded during Asian market hours.
Then see how Europe has traded and how U.S. stock index futures have been trading during European market hours.
Then watch how the U.S. stock index futures--and correlated asset classes, such as oil, gold, the U.S. dollar, and interest rates--behave on the release of any preopening economic numbers.
Then formulate your views as to whether U.S. stock index futures are trading in a range or with a directional bias. Identify price targets you think the market could hit in early trade if your view of the market is correct.
Then treat the market open as a news event, just like an economic release. See if the opening price action changes your view as to whether we're trading in a range or with a directional bias. Revise your views of market targets accordingly.
Repeat this process for any economic releases that follow the market open.
Hypothesize, strategize, revise: Updating your mental models of the market keeps you flexible--and keeps you on the right side of market moves.
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