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Trading Education Posted by Team Topstep May 3, 2022

The Most Important Trade of the Day


Think about two scenarios that all traders have faced. In the first, your trading session opens, your criteria for entries align, and you pull the trigger and enter a trade. It goes well. Things feel right! You feel less anxious about your second trade and even feel patient waiting for an ideal entry. You do so successfully, and before you know it, you have two winners in a row. Now your pressure for the day has been lightened. 

I believe that any reader who has traded can relate to this experience. These days feel refreshing. However, if you have experienced the benefits of this first scenario, undoubtedly, you know the disadvantages of the forthcoming example.

Your first trade in the session goes wrong. In turn, your mind begins to say rational but distracting things. You realize that you need a winner now just to make up for your loss. Furthermore, you will need an additional winning trade beyond that just to become profitable on the day. 

After one loss, it feels that two in a row may be hard to obtain. Furthermore, what if you lose a second time? Then you will need three winners to turn the day profitable. As you consider these realities, anticipation, and anxiety build. When you are trading with anxiety, you are already decreasing your chances of success. 

Again, I think we’ve all been on both sides of this. The very simple reality is that the first trade of the day often sets a benchmark for your performance; that’s why it’s so crucial to maintain the right temperament and the emotional and psychological balance for the day.

Routines Make A Difference

They say that a successful day is dependent on your earliest habits – waking up appropriately, having a morning routine, and eating breakfast. Likewise, your first trading habit also sets the tone for the rest of the day.

My readers often hear me relate stories of my consultation with traders looking to improve. For example, I recall one trader who was bright and profitable; however, he needed an extra edge to go from modestly profitable to concentrating on a career in trading.

We ran a simple assessment in an excel spreadsheet, and come to find out, his first trade of the day overwhelmingly dictated his trajectory. If I recall correctly, he finished profitably on 90% of the days when his first trade was a winner. On 70% of these days, his gains continued to increase. 

Meanwhile, of the days when his first action resulted in a loss, 65% of his sessions would lose or break even. If this guy had only made 1-3 trades per day, then these results might be expected. However, since he was making ten or more trades a day, these indications were quite stark!

Today’s article will examine some of the benefits of starting the day with a winner and some steps that you may take to improve your chances of having gains early in the session. 

How Does Winning The First Trade Benefit?


Markets are heavily correlated to momentum. So is the rest of the human experience. When we start well, we feel positive. Positive vibes tend to lead toward healthy and beneficial choices. This is circular, and it continues to revolve. 


Winning the first trade enables us to feel successful and move some of the doubts and early jitters of the trading session out of the way. Obviously, overconfidence can be detrimental. However, any successful trader must have confidence. Have you ever seen a winner with noticeable self-esteem problems? A productive first trade will help relax your decision-making. 

Playing With House Money

A significant benefit of that first winning trade is creating a buffer. When playing with house money, you have nothing to lose in a theoretical sense. Of course, this feeling leads to undue risk for some of us, but it leads to easier decision-making for others. 

Playing with house money, in this sense, also enables you to continue to build your winnings for the day. In other words, it gives you a chance to compound profit rather than fighting to return to even.

How Costly is Time Value?

Perhaps an overlooked benefit of the initial winner is that you can walk away if you really nail the early trading. Sure, there are advantages to riding the wave of success, but we all know how little time we have available, so gaining access to time is nothing to scoff at. 

How To Plan For Early Trading Success?

Next, I want to examine three very simple attributes required to routinely find a winner early in your trading day. These ideas are not rocket science, but they cannot be ignored either. 


I’ve seen folks make good trades on a whim, but I’ve never known anyone to have enduring success over the years without having some kind of plan. Knowing which markets, at what times, and what signals to take or not take is imperative. If you are impulsive, you will fail. 


If you are going to perfect the craft of giving your first trades the best chance of being winners, then patience is critical. You have to plan precisely what you want, then wait for exactly the right moment. Chasing trades will not be an option. This is one case where having a larger account value tends to help, as, with the ability to take on a suitable size, all it takes is one trade in the day to meet your profit quota. 

What helps some traders is that if their planning for entries is really fine-tuned, they can watch several markets waiting for their criteria to trigger. Otherwise, staring at one chart all day can cause your eyes and mind to play tricks on you. Inevitably, you will see things, patterns, and formations that do not exist. 

Another way some traders find patience is through multitasking. Of course, this method has to fit the right trader; however, I can sit behind multiple monitors and usually write this article during times of stable volatility while also managing to trade. The productivity I gain is that I’m engaging my mind in something else while also not missing trades.

Discipline – Risk Control

Managing your risk is the key to giving yourself a shot at long-term success. If you are trading for the early winner, then you will benefit by risking less to earn more. Consider that you risk a factor of 1 to make a factor of 2. Then, if your first trade is a winner, you have two chances to trade again and lose before going back to break even. All you need is one of those two subsequent chances to hit in order to keep your daily momentum going and play with more house money. 

However, it will never work if you are risking more to make less. You will be left in a position where your winning percentage has to be exceptional and probably unreasonably high to sustain long-term success. 

What Kinds of Systems May Work for the First Trade?

Next, I’ll lightly treat a few more generic ideas of strategies you may consider to make your first trade work. This article has largely assumed that your trading day begins somewhere around the market open when there is more action. 

I tend to look at multiple time frames, which may amount to five and fifteen-minute bar charts. 

Breaking a Range

This can be done in so many ways—by when a market breaks its off-hours range, with the range established by the previous bar just before the regular open, or by the first bar of the regular session. 

Some will look at the first 15, 30, or 60-minute range. Any of these can work with further established criteria. What’s important is to know which factors make these breakouts work better or worse. For example, less volume and a relatively inactive open will likely result in reducing the chances of a breakout trade working. It also helps to use multiple overlapping barometers to create your trading criteria. 

Reversal At The Extremes

Another method that can work happens when a market has become significantly overbought or oversold during the overnight session. This idea would be confirmed by multiple solid indicators utilized on multiple time frames, followed by looking for some price action confirmation of an early reversal on the open. But watch out! You don’t want to get trapped on the wrong side of early momentum! Many times if the price does fade early, then it will bounce and resume the overnight trend. This is also good to remember for a continuation strategy. 

In Conclusion 

Please read this article and know that these ideas alone are not enough to change your trading life. However, if you reflect on this content and incorporate it into your strengths, you have the potential to find much that can benefit your trading mentality. The first trade of the day may very well be the most important one, so let’s all work to make it count. Until next time, trade well!