The Trading Routine

Trading has the false reputation of being a dangerous, emotion-filled profession. Some describe it as a quick way to make money or even worst, as a complete scam, a game without a winner. Trading is controversial. The biggest misbelief uneducated individuals have about trading is the amount of preparation and data that goes into trading. Every single winner and loser is based on hours, days, months and years of diligent work that builds upon a trading routine. This blog is aimed to help you build your personal trading routine.

“By failing to prepare, you are preparing to fail.”
― Benjamin Franklin

Why should I have a trading routine?

Trading should be mechanical, emotionless, nearly automated. Having a trading routine will enable you to make logical decisions and avoid being unprepared.

Having a routine makes your discipline improve, it makes you more objective as you are prepared for every situation, luck has been erased from the equation. Trading becomes easier as the hard questions have already been answered, leaving you room to breathe and trade without questioning your positions. You notice changes faster and find room for improvement. You learn from past trading mistakes trough your record-keeping procedure and improve your judgment.

How is it structured?

Weekend Analysis

My whole routine starts at the weekend. Starting early makes it easier for me to be more focused during the market hours. During the weekend I work on multiple things, but these are categorized into two major categories.

The first part is reviewing. On Saturdays, I review the weekly performance constituting the entry, exit, mistakes and more. Reviewing my trading makes me see the mistakes I made and as I do it every week I not only see trends in the market but in myself. Picture this, on week one I notice that I overtraded on one ticker, chased my entry on 2 adds and didn´t cover one position due to emotional behaviour. On week 2 I get the same results but overtraded on 2 tickers. In the subsequent week, I get the same results as on week 2 but got emotional covers on 3 stocks. Notice the trend? Something changed throughout the weeks. Tracking my emotions and mistakes gives me an edge because I see trends within myself before they become trends on my profit chart.

The second part is the research. I review the past week´s tickers and make a list out of those that still have potential. The research happens in two parts. The first part is technical analysis compared to statistics. Just because a stock still has a gap to fill does not mean I can trade it. But if the statistics and the data give me an edge I will play it. The second part is fundamental analysis. I go through the sec filings and find an edge to play. Once both the technical and the fundamental analysis are done I grade the tickers from A+++++ to C- and put them in my watchlist for the upcoming week.

The Daily Routine

The daily routine is strict and precise. I get up at 11:30 am (german Time) every single day of the week. I shower and make coffee and head to the desk. At exactly 7:00 am(market time) I am going through the gap scanner and grade the stocks in the same manner I do during the weekend, technically and fundamentally. If I get a good enough risk ratio I will enter a position as early as 7:05 am market time. Until 4:00 pm I am fully focused on the market and on the members. When the market closes I eat my first meal and I drive to the gym. This has two main reasons. The first one being that I need to fully detach myself from the market and the second one is the physical aspect. Being a  trader requires you to be in a constant strong mental state. The body and the mind work in balance, they work together. Exercising every day makes me a better trader and helps me disconnecting from trading at the same time. Once I come back from the gym I have my next meal and I start to review my trades. Either I make a video about the trades in the form of a journal or I write it down. Furthermore, I put in the data in my spreadsheets for me to review it on the next Saturday.

The Monthly Analysis

The monthly analysis recaps the weekly analysis. As you now know the data gathering and analysis process starts on a daily basis, followed by the weekly and ends with the monthly analysis. The whole data will give you an enormous edge. You will know how much your trading is improving. Not only will you know how your trading is improving but you will know exactly why. You will not let luck run your trading, but you are taking every step to improve your trading!

Discipline and consistency

At last, you need to understand one thing, your routine needs to be followed as strictly as your trading rules. Your trading builds upon your routine and your routine builds upon your trading. Without discipline, you will not follow your routine and you will trade emotionally. If you set up your life to be all about discipline you will trade in the same way, because you don´t know and would not do it another way. You need to consistently repeat the routine because if you don´t your data set will not be complete and you will not be able to get the statistics you want out of the raw data. If your routine is not followed with discipline and with consistency you will not have the right data. You won´t be able to see your progress and thus you will not be able to succeed as a trader as a result.

Now go on and create a routine that fits your personality. The routine should reflect your trading approach and it will lead you to become the trader you always wanted to be.