Eat. Trade. Sleep. Repeat.
The professional tends to do the right things unconsciously. They wake up, they trade, book their profits and then do the same thing again the next day.
But a careful study of the conduct of these traders shows a number of common actions that they do differently from less successful traders.
With careful prodding, modelling experts like Van Tharp have been able to isolate what these tasks are, and create a framework the rest of us can follow.
Tharp calls these the top tasks of trading, and they are the subject of lesson #19 in the Advanced Forex Course for Smart Traders [get free access].
So how do we incorporate these tasks into our Forex trading day?
It starts in the weekend
Task #4 is developing a low-risk idea (we will get to the earlier tasks later).
This is where the professional puts in the hard work outside of their normal trading hours.
One of the keys to trading is having absolute clarity about what you are looking to achieve when you arrive at your trading desk. If you are trying to figure this out when you are trading, watch out.
You should know well in advance where the potential opportunities lie, as well as how you are going to capitalize on them, and exactly what/where the risks are.
This means putting in the effort outside of business hours.
What are you looking for during this analysis phase? See the list of questions here.
You can also take stock of your current positions (overview monitoring from task #7). Are they still the right positions for the current environment?
Of course the situation can turn on a dime, so you don’t need to be rigid in your view. But if you do the planning, you will find you have sure footing in an otherwise turbulent market.
Settling down to trade
Unless your strategy requires constant attention, resist the temptation to stare at the chart all day. The markets are going to go up and down without you watching them.
Instead, set specific times to give the markets attention based on the requirements of your trading strategy.
The beginning (or end) of trading sessions can be good for this. Consider:
- The Asian open
- The European open
- The London open
- The US open
- The US close
You don’t need to be there for all of these, just what is relevant to you. My attention is generally given to the European open and the New York close.
Prepping the mental state
Good traders know that they are the most important element in their trading.
The solution to achieving their goals is inward and not out there with all the noise and kerfuffle.
Thus, attaining a peak performance trading state is a critical daily task.
There should be a period of self-analysis, reflection and meditation before trading commences.
This should encompass setting your focus and attention on the upcoming session (based on pre-planned objectives).
Remember to breathe deeply and fully, letting go of tension.
Close out of non-trading related programs and websites. If you are a windows 10 user, then try this cool virtual desktop feature to separate your trading from your other online activities.
Ideally (and this could be the night before), the trader will mentally rehearse how they are going to act during the upcoming trading session.
Perfect practice begets perfect performance.
Trading is a process
Rather than a scattergun approach, trading should be a process.
At your trading times, you should have a set of actions to take that are the same every day. These processes encompass the tasks of stalking an entry, taking action, monitoring, aborting and taking profits.
These can include:
- Reviewing daily reports and the news flow. Has anything changed for your weekly plan? What new insights or convictions can you gain? Are there any opportunities that need your attention right now? What is the current market sentiment?
- Chart analysis: Has the market type changed? Are there any new set-ups, or entry/exit signals of note? How should any new trades be implemented?
- Position management: Do profits need to be taken? Do any trades need to exited? Are there any mistakes with your positions you need to fix? Is it appropriate to add to a position?
Additionally (and crucially), the trader needs to be prepared to switch from the stalking phase to the action phase (i.e. when they pull the trigger to enter) seamlessly, and the process should support this transition.
Taking care of business
At the end of each trading day (or week) it’s time to take care of business.
This means recording all your trades, taking notes in your journal, and updating your trading plan. This allows for continuous improvement and increases efficiency (i.e. helps to stop mistakes creeping into your trading).
Periodically, this should include an in-depth review of your performance.
Bigger picture, you need to make sure you take care of your health, and establish a routine of fitness – perhaps you get a personal trainer with your trading profits.
Finally: be grateful for what went well, accepting of what didn’t, and then set a positive intention for the next trading day.
Take one small step…
Following a trading routine can take time and effort to fit into your already busy lifestyle.
But start small.
Pick one or two of the steps described in this post and start to integrate them.
When you are settled with those, pick another.
Eventually, with a little dose of persistence, you will find you have a routine comparable to that of a top trader.
Let me end with a few immortal words from Lao Tzu …
A journey of a thousand miles must begin with the first step.
Take that first step.
You’ll be a better trader tomorrow than you are today.
About the Author
Sam Eder is a currency trader and author of the Definitive Guide to Developing a Winning Forex Trading System and the Advanced Forex Course for Smart Traders (get free access). He is the owner of www.fxrenew.com a provider of Forex signals from ex-bank and hedge fund traders (get a free trial). If you like Sam’s writing you can subscribe to his newsletter.