Ideal schedule of a trader
The life of a day trader is not an easy one. But understanding the routine of traders can hugely enhance your practice as one.
Why do you need a routine?
A trader uses both fundamental and technical analysis to capture price trends actively to make market beating profits. This practice essentially gives a more efficient use of capital and allows for much higher returns than passive investing if done the right way.
This may sound inviting, but trading is a demanding job. Only 5% of the people are successful in the markets and remember that you are competing with players who have years of experience and treat this as their career. You can't just start trading and expect to be lucky.
This being said, you should treat trading as a full time job and remember that a trader, especially a day trader is profitable only in the long run. Though different types of traders carry out their operations in different time frames, one attribute stays consistent, ie. maintaining a daily routine, focused on improving one's efficiency, which ultimately leads to superior profits.
It's a bit tough at the beginning, but building the habits and routines that supplement your trading practice can supercharge your profitability in the game.
Something you should know
You may find numerous blogs on the internet telling you what you should do, but not everyone would tell you what not to do. Trading can cause mental turmoil due to its nature of volatility, but eliminating unimportant stuff is very crucial to give yourself more time to do the important things that keep you in an optimistic state of mind. Here's what you should avoid:
DO NOT TRADE BECAUSE OTHERS ARE DOING SO. We learnt it the hard way and don't want you to go through the same. Just seeing someone making profits doesn't mean you can too. Do not jump on to the bandwagon and copy strategies but instead, do your research to figure out what works for you.
DO NOT SPEND MORE THAN 5% OF YOUR CAPITAL UNTIL YOU ARE SUCCESSFUL. Start only with what you can afford to lose. Once you start making decent profits consistently, you can slowly think of increasing your capital.
This is one of the most crucial, but underestimated times of a trader's week.
Make the most of your weekends by planning your trade strategy for the upcoming week. A typical trader goes through all the charts in which he/she trades, scanning for important patterns, redrawing their support / resistance levels and setting price alerts, a useful automation that helps avoid panic buying or selling during the week.
The weekend is the right time to get yourself acclimatized to the prevailing economic conditions of the world. Spending some time to get an overview of the world markets, oil prices and currency dealings proves to be very effective in gauging sentiments of people during the active market hours.
Also, this is the perfect time to expand your knowledge base by learning about new trading techniques and strategies, exploring new markets or commodities, reviewing your past mistakes and planning for the long term. Though this may not sound so result driven at the time, keeping up with continuing education can give you a bird's eye view, helping you make coherent long term decisions as a trader.
The Morning Hustle:
First up, the news check. One can easily get lost in the news and be confused about which news is relevant or irrelevant. Seasoned traders advice to look up on the overnight international trading activity, indices, commodity and currency markets to get an idea of overall sentiment. Though it takes time to develop a knack in interpreting news correctly, one can start by going through news to answer the following questions:
How is the economy and are the markets bullish or bearish overall?
Which sectors are in focus today?
Which companies have important announcements to make today?
The next job, pretty intuitively, is to check on existing positions. Go through the trades you have entered to see if the fundamentals that made you take them still hold true. It's wise to revise your stop loss, or better, targets to adjust to that day's market sentiments and according to your goals. Set new price alerts if required.
Since you must have already organized your market watch during the weekends, your mornings can be pretty peaceful and you have to check on just a few things.
Check your charts to see if your trading plan is unfolding. If prices are moving as expected, then verify all signals from indicators, if you use any and enter the trade.
If your trading plans are not unfolding according to plan, consider improvising and editing your plans and targets and set a new plan that suits existing market conditions.
Also, don't forget to check on any new developments, that presents an opportunity to enter new trades.
During the day:
Let's give you some relief. Since you have done most of the work over the weekends and in the morning, there's not much left to do now!
Most traders work on candlestick patterns, and chart patterns are identified by the shape and size of the candlestick. To stay updated on where prices of the stocks in focus are heading, one should ideally check charts after every new candle is completely formed. The time frame you choose, i.e. 4 hours, 1 hour or 1 day, is the frequency at which you can check on your charts to either enter, exit or ensure you are on the right track.
Yes, it's time to rest, but here are a few practices that will help you evolve as a trader.
Journaling: Making a note of your trades is one of the best things you can do for long term success in trading. Make a note of the entry, exit price and how much profit or loss you made. More importantly, strive to find out why a trade went wrong and what you need to do differently. Journaling will also help you keep track of your transaction costs so that you can evaluate how profitable you are at the end of the month.
Next day: Prepare for the next day. Check your charts for new patterns, levels and volumes. Adjust price levels and be earful for news that may affect your strategy.
One of the best and time saving investments you can make is to sign up for a good charting software that enables you to add indicators and scanners to your charts.
It is a good practice to keep your charting and trading platform separate. A good charting software like Tradingview will help you to add custom indicators, price alerts and allow you to save templates so that your drawing tools are in place, anytime you want to check up on any of your charts.
Do not be a cheapskate, and consider investing in a good charting software that will help you save loads of time during active trading hours.
If you've made it till here, we're sure you are a stock market expert. Do not miss out on a way to monetize your skills by providing tips to paying subscribers at Tribe. You just have to enter your tip and you can share it across all your social media channels with just one click. Ensure you spend less time on these operations, so that you can focus more on your trades. Here’s how you can do it:
One size doesn't fit all
There are times when the stock markets test your nerves. As a trader, you need to learn to keep greed, hope, and fear at bay. Decisions should be governed by logic and not emotion.
Experimenting with different routines and styles will help you choose which one works best for you. Building habits and following your routine consistently can go a long way in making you a great trader.