Have you decided to approach trading more seriously? Then you have a lot of things to take care of – from meeting hardware and software requirements to choosing appropriate strategies. More information is available in this day trading guide.
But this article is about another important consideration – structuring your day. We’ve identified seven steps to make your trading day more organized and efficient.
Step 1. Set Your Trading Goals
At the start of your trading journey, refer back to the classic SMART principle of goal setting:
- Specific – “I want to be financially stable” is too broad and generic. Consider turning it into something like “I want to make $100 a day from trading”.
- Measurable – Thankfully, it’s easy to track figures when trading. So, if you’re making $50 a day, you know you’re halfway to your goal.
- Assignable – Who is doing the job? Most likely, it’ll be only you, but you can also factor in algo trading (if you wish).
- Realistic – Don’t set milestones you will not be able to reach. For instance, $10,000 a day wouldn’t qualify as a realistic goal for most people.
- Time-oriented – Give yourself a timeline, let’s say, six months of learning and practicing.
Step 2. Define Your Style
How many trades do you open and close per day? What is your average holding period? What are your most frequently traded assets?
Ask yourself these questions to define what kind of trader you are. Make sure to consider the size of your account (i.e., your available trading capital), how much time you plan to spend on trading, your personality (your ability to manage stress), and your risk tolerance.
If you are just starting out, stick to a single style. It’ll help you be more focused and keep your trades under control.
Step 3. Know Your Limits
You may have heard about setting limits on losses – a stop loss order. In addition to this, you should also set time limits. For example, promise yourself that you’ll spend a maximum of X hours per day trading. Or it can be a couple of hours in the morning and a couple of hours in the evening, when the trading volume is at its highest.
If you have an unprofitable morning, you might be tempted to continue trading until you make up your losses. This can create a vicious cycle of chasing your losses. A strict time limit will serve as a stopping mechanism.
Step 5. Create a Schedule
When juggling multiple things – household, family, perhaps another job – a daily schedule is key. It will help you prioritize your responsibilities efficiently and offer structure to not only your trading activity but also any other commitment.
Sometimes, having a lot on your plate today turns into having a lot on your plate this week, and so on. But if you commit to turning on your trading terminal every day at 9 a.m. and taking a break at 11 a.m., you’ll have no excuse.
Keeping a regular sleep schedule is also a must. Real life can stand in the way of achieving the perfect schedule, but it’s always worth a try.
Step 6. Maintain Your Morning and Evening Routine
Start your mornings with a daily dose of news. You should be up-to-date with everything related to financial markets and the assets you’re trading. Consider subscribing to newsletters to have vast amounts of information condensed into a bite-sized format.
In the evening, open your trading journal and make all relevant entries. Write down what instruments you traded and the position sizes, the direction of the trade, entry and exit prices, and the results. It’s also helpful to study the resources that are less time-sensitive. For example, if you trade stocks, study the company’s latest statements, new products, planned releases, etc.
Step 7. Review Your Progress Weekly and Monthly
Review sessions will help you assess what is working well for you and what should be ditched. This is where your daily notes from the trading journal come into play. And the more insights you extract from them, the better.
This is a homework assignment you can complete halfheartedly. You would be simply wasting your time and repeating the same mistakes over and over. Performance reviews are there to help you learn and improve your methodology. But beware of the hindsight bias!
Final Thoughts
Consider these recommendations as guidance, not a set of rigid rules. Everyone’s trading journey is different, so you may find that some other approach works better for you.
The main idea you should take away from this article is that you should have a definite plan of action. It’s incredibly important to have structure and discipline, no matter your trading style. Trading is a serious business, and you should treat it as such.
