If you are serious about making millions trading , setup a process and daily routine

Key to profitable trading is to be well organized for daily routine. Everyday do the same thing over and over in a systematic manner. Improve the efficiency of your process and have set routines.

If you see any sports person , they have set routine and as a result they can focus and perform well. Trading is very much like sports. If all your process and equipment is in order it is easier to trade.

Once you have a well thought out method the day to day challenge is largely about implementing your plan. That requires setting up a daily routine and adhering to it as far as possible.

Here are some of the things I use to organize my trading.

Daily Situational Awareness (SA) 

I  know swing setups work, but overall market conditions can have impact on the % of trades likely to work. So SA helps you in controlling your trade pace. In good environment you want to be more aggressive. In bad conditions you want to focus on risk management. I daily write my SA and then plan accordingly. In difficult conditions I drop size or take quick profits. If coming out of bottom I look to hold for longer swing moves.

Question I ask daily for SA:

What is your market bias today

Is there a plan to exploit it

Is there an alternative plan

Anticipation of breakouts and news plays

I trade both breakouts and anticipation of breakouts. Anticipation and pullback setups allow you to do all work on them after the market close or before open and plan your trade , put orders in place and pre decide exits.

Anticipation allows you to control risk and get in to setups early or as they are breaking out.  Anticipation is also useful on current open positions. If you have thought through what you will do under different circumstances on your open positions you are in better position.

I trade 3 types of anticipation setups: Breakout anticipation on momentum stocks, pullbacks on momentum stocks, and NTRT and MTRT setup based on news. Most days I have 2 to 5 ideas based on that and orders in place before open.

Question I  ask daily for Anticipation:

What homework have I done to identify good opportunities ?

What are the 3 to 5 very high probability opportunities I must focus on today

What is my plan for existing open positions

More time you spend on anticipation , easier it is because you have ideas in pocket.

What is working currently

Different phases of market favor different kind of stocks or setups. Some time beaten down stocks do well. Sometime stocks with momentum do well. Some time anticipation works well. During earnings season there is big opportunity in earnings plays.

Knowing what is working helps me focus on hot opportunities and adjust the tactics and risk.

Question I  to ask daily for What is working:

What is working in the market currently

What stocks and sectors are leading the market currently

What style and setups are working currently

What kind of follow through is happening

Lot of this insight in gained by studying daily 20% plus weekly winners and Top 25 winners on various time frames of 1 year, six month, 3 month, 1 month. This daily study helps you spot subtle changes quickly.

The hardware and software

All our good plans or intentions or setups are of no use if our hardware or software fails or is not optimum for trading.

Question I  to ask daily for hardware and software:

Are you setup in terms of all equipment and software  for trading today

Is your hardware in proper condition

Is your software working without glitch

What is your backup plan in case of failure.

Your mental state

Your mental state affects your trading. If your are well organized and in proper frame of mind for trading you will be successful. If you are excited, harried, angry, disorganized you will find same thing in your trading.

Lot of time distractions from unrelated to trading events in your life can have big impact on your trading. Being aware of these factors can help you avoid trading aggressively during less than optimum mental stage or distractions.

Question I  to ask daily for mental state:

Are you calm, excited, harried , or confused today?

Are there distractions likely to affect your trading today?

Continuous improvement and research and development

As a trader you need to focus at least 25% of your daily efforts on developing new trading setups and ideas and on enhancing your trading skill and knowledge of market. A purposeful plan to do this will cumulatively help you transitions in to new setups and ideas as market changes.

I spend lot of time on further refining existing setups, simplifying the process, trying alternative order, entry , exit, and stop strategies.

Question I  to ask daily for  improvements :

What is your plan for improving the efficiency of trading current setups

What is your plan for enhancing your market knowledge today

What is your plan for enhancing your trading skills

What is your plan for enhancing your trading mindset

What needs to happen for me to be a confident and in control trader

Trading is easy once all the elements are in place. Once you master setups and processes , extracting money out of markets is not very difficult game but it needs a systematic plan and execution.

Once that is in place ongoing challenge is to sustain motivation and drive.

Do I have resources to get there?

Do I have the burning drive to get there?

Everyday using this kind of framework will make you a better trader . If you rigorously follow these kind of checklist you will see improvements in your trading in  90 days.

If you are serious about making millions trading , setup a process and daily routine.

1 comment:

shyam said...

Wow, Best article ever read on trading! Thanks!