Now let’s be honest here – how many of you are really focused when trading the markets? …..
I don’t just mean working in silence with the phone switched off – although that’s great!, but more to do with establishing good habits into your trading routine.
There are so many “good trading habits” articles on the internet, but I’ve tried to keep it real and tell you the habits that I have established into my own trading routine.
So here they are:
1. Have A Plan Before The Markets Open For The Week.
There is nothing worse than sitting in front of the charts without a trading plan.
Up, down, up down… With no plan or bias for each market you are watching, you will be susceptible to impulse trades, changing your mind and irrationally being affected by every price movement on the chart.
By the time you’re halfway through the week, your mind has turned to mush and you feel as though you’ve done 10 rounds with Mike Tyson. The markets will wear you out and grind you down unless you have a plan!
When all is calm and the markets are closed, that is the time to plan for the week ahead.
Establish a bias ahead of time for every market you wish to trade. Decide in advance what conditions would change your bias. Do not waver from that bias unless your conditions are met.
Work through all your timeframes from the highest (such as the daily or weekly) to the lowest (such as the 1 hour or 15 minute). Note all your key levels on these timeframes where you wish to trade or start looking for trades. When the market opens, wait for it to come to you – don’t run after the market.
This may all seem like common-sense, but just with this plan alone, you have taken steps to avoid being blind-sided by the market and “tricked” into taking trades you hadn’t planned.
2. Be Accountable For Your Trades.
Document every trade you take. Review your trades at the end of the day and week. Did you take the trades you had planned? Did you take impulse trades? What could you have done better?
One way to increase your accountability is to start a Twitter feed, blog or some other service and publish your analysis and trades that you take to an audience. You’ll be surprised how much more carefully considered your trades are!
3. Don’t Look At Twitter.
Now this is going to slightly contradict point no.2!
Even though you may be tweeting your own trades and analysis, don’t look at anyone else’s!
I‘ve been trading long enough now, that once I have my trading plan, I can look at anything on Twitter and not let it influence me. BUT… it took me a very long time to get to that stage and you need to be 101% confident of your trading plan before you can do this.
There are an incredible number of gurus, financial news channels, financial commentators and even banks who get it wrong on a daily basis.
So my advice is switch off Social Media, chat rooms, Bloomberg, CNBC, etc. when trading. There are an incredible number of gurus, financial news channels, financial commentators and even banks who get it wrong on a daily basis.
Furthermore, some traders on Twitter may simply have different objectives for their trades in terms of timeframe, stops and targets. It’s totally possible for two traders to trade in opposing directions and still both make a profit.
4. Stay Fit & Healthy
Trading is a sedentary occupation. It’s very easy to sit in front of your screens all day long and barely move a muscle. I’m guilty of it too!
There’s no getting away from the stress that comes from trading financial markets. Although some people will tell you that trading should be emotionless, we are all human and even with training, will experience stress to some extent. Combine this with unhealthy eating, shortage of sleep and daylight and at best you’re brain is not going to be in any shape to combat the markets. At worst, you might be working yourself into an early grave.
Although some people will tell you that trading should be emotionless, we are all human and even with training, will experience stress to some extent.
Go out, get some daylight (and Vitamin D!). Do some cardio, tennis, jogging – whatever floats your boat. Your body needs those good endorphins to boost your mood, eliminate stress and depression, and keep your brain sharp.
And when you’re stuck in front of your screens, have some sort of exercise equipment nearby. Some traders keep a rowing machine or stepping machine at their desk. I have a Kettlebell by mine. Again, whatever suits you best.
5.Find A Distraction When In A Trade
My best trades are often trades where I pull the trigger and then go out and get on with the rest of my life.
A recent example was a Euro trade that took 3 days to play out. The market was just moving incredibly slowly – funny how it only moves quickly for stops and never targets!
Anyway, while this trade was playing out, I had various errands to run and found myself away from the screen for long periods of time. Had I been sitting in front of the screen, there would have been times when I had been tempted to close the trade out at a small profit. Being away from my desk was a great distraction, allowing the trade to run to it’s target.
The key is to find a distraction that keeps you busy when you shouldn’t be watching every tick of the market, but allows you to switch back to “market watch mode” when required.
There are only certain times when my screens demand my full attention:
1) When I’m planning my weekly analysis.
2) When the market approaches a level of interest and I am looking for an entry.
3) When I am near my target or something happens to change my target or stoploss.
At any other time, I like to keep myself busy working on the educational side of my business or getting distracted with everyday life. That means I don’t get distracted by the minutiae of price action whilst a trade is in play.
The key is to find a distraction that keeps you busy when you shouldn’t be watching every tick of the market, but allows you to switch back to “market watch mode” when required. If you are away from your desk, you can always set alerts when the market requires your attention again.
There’s also a great free (for personal users) software app called Teamviewer that allows you to remote access your trading PC from most mobile phones and tablets. It’s downloadable from the Apple App Store and Google Play.
So that’s my 5 good habits that I incorporate into my trading routine. I hope you can use some of these tips and incorporate them into your own routine too!
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Very good reminder. Thanks for sharing
Love your article , great advice. Do you happen to have like a model / rough draft / spreadsheet that you could share to register my trades and work on creating a trade plan for the week ?
I would greatly appreciate
Hi Axel, recording your trades is very easy to do and I’d encourage you to have a go yourself. A simple spreadsheet with headings such as Currency, Side (B/S), Entry Price, Stoploss, Exit Price, Entry/Exit Comments would suffice. If you want a more comprehensive method for logging your trades I would recommend using Edgewonk.
Regarding the trading plan: I produce charts with my key levels, zones and bias starting from the monthly timeframe right down to the 1 hour. I’ll also have those levels and biases summarised on a single sheet of paper.
Some traders prefer to write lengthy essays for their trading plan, but I’m more of a visual person. At the end of the day there’s no hard and fast rules – it’s a matter of personal preference how you approach this.