How to build a pre-market bias
A pre-market bias is a written statement, made before the session opens, of which direction you expect price to draw and the level that would prove that view wrong. Its job is not to predict the day. It is to decide in advance which trades you will take and which you will ignore.
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The routine
- Name the draw. Find the obvious pool of liquidity price is most likely to reach for: a previous day high or low, an untouched higher timeframe level, an old imbalance.
- Write the bias and its invalidation. One sentence each: where you expect price to go, and the level that means you are wrong.
- Mark three levels at most: the draw, one opposing area, and the obvious pools between them. More lines than that and every candle looks like a setup.
- Fix one trigger. Decide which confirmation counts as an entry, on a candle close, and do not change it during the session.
- Decide risk first. The stop sets the size. Size, target and the daily loss limit are settled before any order is live.
What to check before you write it
- The higher timeframe: is the daily and 4-hour structure pointing the same way as your idea?
- The overnight session: where are the Asian and London highs and lows, and which of them has already been taken?
- The calendar: which releases fall inside your trading window, and when?
- Related markets: are the indices, the dollar and yields telling the same story or disagreeing?
Scheduled news deserves its own rule. A common one is to plan exits an hour before a major release, be flat fifteen minutes before it, and only look for a trade again once the first reaction has printed.
A bias is not a prediction
The value of writing the bias down is the invalidation line. A trader without one keeps the same opinion all day and looks for reasons. A trader with one has a specific price at which the plan is cancelled, and can stop trading the idea without arguing with the chart.
A bias is also allowed to be "no trade". If the higher timeframe is unclear, the calendar is heavy, or price is sitting in the middle of its range, the correct pre-market note says so.
Close the loop
After the session, compare the note with what happened. Was the draw reached? Was the invalidation hit? Did you trade the plan or something else? Kept in one format, these notes become the record that shows whether your read or your execution is the part that needs work.
Indicators that draw this
- Dynamic Range Tool (free): The session range, its quarters, and the projections price is running into.
- VWAP Suite (free): VWAP as a developing value area across every session, not one line.
Questions.
What is a daily bias in trading?
The direction you expect price to move during the session, together with the level that would prove that view wrong. It is set before the open and used to filter which setups you take.
How long should a pre-market routine take?
Short enough to do every day. For most traders that is 10 to 20 minutes: the higher timeframe, the overnight levels, the calendar, then two written sentences.
What if my bias is wrong?
Then the invalidation level is hit and the plan is cancelled. That is the routine working. A bias is useful because it defines being wrong before any money is at risk.