Every trader eventually divides into one of two camps, and the line between them is drawn long before the market opens. On one side are the people who treat trading as a discipline — closer to chess or to science than to anything else, a craft of preparation, observation and considered decisions. On the other are the people who treat it as gambling: they switch on the screen, look at a chart they have never seen before, feel a hunch, and click. They will tell you they are trading. They are not. They are betting, and the market collects from them with the same reliability that a casino collects from its customers.
The single thing that separates the two camps is homework. It is the first of our twelve rules because it is the foundation on which every other rule stands. Skip it, and nothing else you do will save you. Do it properly, and you have already placed yourself ahead of the majority of retail participants, most of whom never prepare at all.
The morning before the open
Homework begins before the market does. If you intend to start trading at nine, you do not roll out of bed at five to nine, still half asleep, and expect to make sharp decisions. You get up at seven. You give yourself two hours, and you use them deliberately.
Begin with your body, not your screen. A short bout of exercise — even fifteen minutes — wakes the mind as much as the muscles. Make your coffee. The point of this opening ritual is not comfort; it is readiness. Trading is a performance activity, and you would not expect to perform any demanding task well while groggy and rushed. By the time you sit down in front of the charts, you should be alert, settled and unhurried.
Then comes the part of the morning that decides more than most beginners realise: you read the news.
Why the news sets your direction
Reading the news is not a box to tick. It is how you establish the directional bias for the day, and that bias governs everything that follows.
The logic is simple and it is not negotiable. If you wake up and the news flow is genuinely bad — a geopolitical shock overnight, a grim economic print, a major company in trouble, a central bank turning hawkish into a fragile market — then you already know something important: today could be a down day. Under those conditions you do not go looking for reasons to buy. You cannot rationally position for rising prices into a tape that has every reason to fall. Recognising that early keeps you out of the most common beginner's trap, which is buying a falling market because it "looks cheap."
The reverse holds just as firmly. If the news is strongly positive — a relief rally setup, a strong data surprise, a dovish surprise from a central bank, risk appetite returning — then you do not go hunting for short trades. Fighting an up day because you have decided the market "must" correct is how disciplined-looking traders quietly bleed their accounts. When the wind is at the market's back, you do not try to sail into it.
This is the essence of swimming with the trend. The news does not tell you exactly where price will go, and it certainly does not hand you precise entries. What it does is tell you which side of the market you are allowed to be on today. Knowing that — and respecting it — eliminates an entire category of losing trades before you have placed a single one. The market is far larger and far better informed than any individual sitting in front of it. Your job is not to argue with it. Your job is to read its mood and align with it.
The evening before the morning
Here is the part that beginners almost never do, and the part that, more than any other, marks the serious trader: your real homework happens the night before.
After the close, you sit down and you look at the charts. Not glancing — studying. How did the day actually develop? Where did price open, where did it find support, where did it stall? Did it trend cleanly or chop sideways? Did it close strong, close weak, or close in the middle of its range? The way a session ends tells you a great deal about the balance of buyers and sellers going into the next one, and reading that close is one of the most useful habits you can build.
From that reading, you form your plan for tomorrow — that evening, not the next morning. This is the discipline that turns trading from reaction into preparation. You should be able to look at the chart after the close and say, in advance: based on how this market is structured, tomorrow should be a long day, or tomorrow should be a short day. You write down what you expect, the levels that matter, and the conditions under which you would act. The plan is built while the market is closed and your mind is calm, free from the pressure and adrenaline of a live session.
Then the morning routine closes the loop. You wake, you exercise, you drink your coffee, and you read the news — and the news is the final filter applied to a plan you have already made. Most mornings, nothing fundamental has changed overnight, and the plan you wrote the evening before stands. Occasionally something has shifted — an overnight event, a surprise release — and the morning news tells you to set the plan aside or invert it. Either way, you are never improvising. You arrive at the open with a considered view and a single question to answer: does today's news confirm the plan, or override it?
Preparation is the difference
This is why "do your homework" is Rule No. 1 and not Rule No. 7. Without it, every other rule in this series is an instruction shouted into the wind, because a trader who has not prepared has no framework to apply the rules to. They are clicking on instinct, and instinct in the markets, untrained, is almost always wrong.
The traders who treat the screen like a slot machine will always exist, and they will always lose, because they have skipped the only part of the process that creates an edge. Doing your homework will not guarantee a winning day — nothing does — but it guarantees that when you act, you act for a reason you can state out loud, on the side of the market the conditions actually favour. That is the difference between a trader and a gambler, and it is decided long before the bell.
Do your homework. Everything else in these twelve rules is built on it.