See the hypos!

Merritt BlackFutures, General Comments, Intraday Levels, market structure, Trader Development

I’m grinning from ear to ear today.

One of my mentees was tasked yesterday to begin preparing premarket “hypos” each morning. It’s just what it sounds like – a few hypotheses for how the day might unfold, therefore providing a roadmap for the day with key inflection points and potential targets.

Here’s a screenshot of his premarket journal post in our SMBU Performance Center tool, alongside a market profile graphic of the resulting movement today in crude oil futures:

Hypo 2 absolutely nailed it! Well done!

Creating hypos each morning as a part of your premarket does so much for you:

  1. Helps develop great process and habit for a trader to better prepare for each day. Learn to prepare like a professional. Understand the contextual landscape.
  2. Allows for more confidence in executing the trade in real time – you’re prepared for the scenario, you stalk the trade, you know where you’re wrong, and you have an idea of potential reward.
  3. Provides objective feedback each day. There is no hiding behind, “Oh, I should have done this or that!” or, “I knew xyz would happen!” Simply put, if you didn’t write it out before the market opened – you simply did not see the potential for that scenario in advance.
  4. Maybe you did have a great hypo, and for whatever reason you did not execute your trades well – despite the hypo playing out. Well, this is powerful information for your improvement, simply by process of elimination. Your ability to read what markets is fine. You now know where your issue is. Review & explore where your focus is during the session – at the hard right edge of the chart. Here’s an article to Close The Gap and improve the difference between what you’re able to see as opportunity in hindsight vs real-time.
  5. Makes stop outs both easier and more meaningful. When you’ve: 1) clearly laid out multiple scenarios for how the day can unfold, 2) also laid out inflection points for those scenarios, and 3) end up taking a trade in accordance with one of those plans and getting stopped out; then you understand there is a contextual shift occurring in that market! Stopping out is not frustrating, because you’re aware that scenario B is playing out now, and you are also prepared to profit from it. The stop out is easier to swallow, and it is providing us with meaningful information about that market.


Begin developing premarket hypos each day as a part of your premarket preparation. You’ll thank me later. If you’d like to discuss working together through mentoring, just click the image below.

-Merritt Black

*No relevant positions

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