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16 years as a trading and life coach

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"Routines & The Trader"
 
By Robin Dayne

Routines and the Trader

Routines or rituals can help prepare a trader for their trading day by establishing a set of things to do in a specific order.

This topic can also help to set –in a traders disciplines and we all know how important that is.

All those, that I have seen trading at the high end have trading routines that allow them to prepare for their day, be ready when the market opens and keep them mental prepared for whatever the market will throw at them.

Those that stick to it, I have found, seem to have an easier time of things, maintain better control and lose less because of their preparedness.  Some even start the night before with the over night sessions after all we are now global traders much different from 10 years ago.

I even remember saying at seminars, back 7 to 8 years ago, "just watch in 10 years you will be able to trade any market from anywhere 24/7" and here we are. It came faster than expected and before the 10 years, but it came so fast I can't pin point exactly when the transition happened.

So now, routine and global thinking need to be incorporated into the everyday routine and trading strategy if it's not already.

What do routines do for the trader? By establishing a routine and working it through each day the mind has something solid to hold onto. Information is consistent, decisions are speedy and smooth and when something new does come up, and we know it will the reaction can be pure and clear because everything else is in order and under control. Think of it as "mind organization."

Why do we traders need a routine? I guess you really don't have to have a routine but again from my past experiences with at all different levels of traders I've spoken to, those that use them do seem to be more successful.

Having a routine can reduce stress because if things are in order and in control. The mind is free to handle anything additional. A trader is less likely to make a mistake should the market throw a curve or an unexpected event happens.  This is especially true if you are trading multiple markets

Think about it, let's say you have a few positions on in different markets and each is reacting differently keeping them straight can create overwhelm.

My definition of overwhelm is thinking of too many things at one time, and the mind is jumping around trying to decide what to do next, like juggling and keeping three balls in the air at one time. Nothing is accomplished with this mindset and thinking.

Dealing with the power of thought or thoughts as a trader trades puts the mind into overdrive.  I really don't think many traders THINK about how much their mind is processing when they trade they just do it. 

Let's THINK about how much our mind is dealing with. First we usually have multiple screens of information that need to be deciphered. We add in the technical analysis, fundamental information, start thinking of how all these should be working together as we watch the price action of the market and now add in the other markets and news and commentaries and don't forget we are keeping our eye on our set-up criteria and when to enter. Oh yes and if you're in a trading room or chat you are adding in what others are saying too and formulating your next course of action.

Oh and of course please don't forget the emotions you maybe dealing with - fear apprehension, uncertainty, hesitation or anxiousness and working to control too!

Now take all that and change the information every second….and WOW….our minds are working on hyper-drive…..I'm getting exhausted just writing this! So it's not very hard to wonder why we could be feeling stressed.

Oh yes and I forgot to mention adding how you are physically feeling too or that someone personal issue maybe bothering you.   Life has a way to sneaking into our trading day if not careful.

What does a trader do? A routine and regimen can help because if you do it enough the sub-conscience will get programmed and you can be on auto-pilot and in the worst situation and be able to manage it.

Installing a routine goes a bit like this.

1) First make a list a of all the things you will need to do as soon as you wake up and throughout the trading day.

2) Next determine how much time you will need to do each item on the list.

3) Create an execution time line - when will you do each item and for how long.

4) Test it during the day with an egg timer and see how you do. Make your adjustments where you need them.

Use an egg timer to stay on track at first.

Here is an example of a planned routine for trading on the West coast.

5:30 am wake up
5:30 – 5:55 – shower and dress
5:55 – 6:10 feed the animals and self
6:10 – 6:15 review the over night markets
6:15 – 6:30 – set goals and trading focus for the day
6:30 Market Open
6:30 – 8:30 take any trade set-ups that occur
8:30 - take a break

And so on…this is just a small example create what works for you. Make a check list of things you have to cover each day and remember through repetition you can install it.

Also keep in mind it takes 21 consecutive days to install a habit. When you do this it's now in the sub-conscience mind and we can go into auto-pilot, just like we do when we drive. We don't' think about putting the key in or adjusting the mirror or seat-belt we just do it.  Guess that's what Nike means in their ads "Just do It."

We are actually in the testing of a product that will help to program the mind in this way and as soon as we are done YOU will be the first to know it's there.

….and in the meantime Great Trading!

Disclaimer/Nondisclosure 

ALL the information in the Robin Dayne Newsletter is for educational purposes only and is the sole property of Robin Dayne Inc. (RDI) and may not be duplicated, recorded or reproduced in any way and includes: verbal, print, e-mail, or any media vehicle without the written permission of RDI.

Trading can be a lot of fun and profitable or a nightmare and very costly. It really just comes down to understanding the key areas, which will make or break your trading.

I have received a few emails asking me to explain more about how I stay disciplined, making sure my emotions don't get the better of me. Some questions asked are:

How do I pick a trading strategy, which will work for me?

What reading material and habits do I recommend for keeping focused?

What are some of my experiences?

I will cover all this for you below because trading discipline and managing emotions is by far the most important and difficult aspect of trading.

How do I pick a trading strategy, which will work for me?

Your strategy should be inline with your abilities to read the market also focuses on a time frame, which suits the time you have available to trade each day, week or month. In other words, you should not be trading ETF options if you cannot profit from trading ETF's without leverage. Also if you don't understand how options work in depth, then you need to spend some time learning about this type of trading vehicle before you ever place a trade using options. Simply put, if you don't understand everything about what you are trading, then you will eventually give all your money to the market, leaving you with an empty account, decreased trading confidence and a frustration.

The point I am trying to make here is that you should focus on trading the types of vehicles where you understand the daily price action, how to trade that investment, what makes it move, is there leverage, and what time frame you should focus on, so that it works with your schedule. If you can only look at the charts at night, after the markets close, then you should not be focusing on day trading. So pick something you like, understand or want to trade and learn everything about it. Then find a trading system or create one yourself, which is profitable using the time frame and risk tolerance that fit your personality.. Read More

Will 1200 finally be taken out this week?
April 11th, 2010

Why is 1200 important? 1200 was the last leg down in July 2008 and became initial support if you look on the left-hand side of the daily chart. You further see the market rebounding 10% into September 2008. Then the S&Ps broke 1200 support, experienced a weak rally and from that point it was a near vertical descent in a matter of weeks to the 850 level. Now previous support at 1200 becomes resistance the first time back.

The Outlook:

Given the market's 70% rally since the March lows someone new to the market might even think there is in essence an SEC ban on all selling. Recently, stocks have risen in over 70% of all sessions for over double-digit gains. Declines were less than 0.5% during the last two months. Mondays are almost guaranteed a 1% rally with all the mutual fund cash being put back to work after the weekends.

Barrons writes this week in the Trader Column - "Let's not even pretend there's any suspense: Come Monday companies will begin reporting first-quarter earnings that will be nothing short of great". Analysts are penciling in a 37% rise in first-quarter profits versus a rather weak '09 quarter.  The reporting season will lead to blowout year-over-year comparisons for many firms.

The only real question we have to answer is will investors be looking for more?  Even if the earnings come in much better than expected will investors who have bought the rumor now be looking to sell the news. We know the S&Ps have seen six straight weeks with a gain of more than 6% over the stretch. The economic data is improving by leaps and bounds. Still the last two rather good quarterly releases has seen investors taking profits.

There is even more good news expected from the EU. Over the weekend investors are hopeful of news for a German below market rate interest rescue plan. Bloomberg writes: Germany said to accept compromise on loan to Greece.

Just released news on Greece:

Eurozone finance ministers agreed to specific terms for possible aid for Greece saying they would provide up to €30 billion for the country in the first year of any support program. The finance ministers agreed Greece would pay an interest rate of around 5% for a three-year loan program, according to European Commissioner for Economic and Monetary Affairs Olli Rehn. If there ever is a time where the markets should rally through 1200 and into a larger resistance near 1225-50 this is the time.  Thereafter, let the profit taking begin.

What can go wrong? But it won't happen in the near future.

I truly believe the biggest geopolitical risk, Iran, is off the table. Obama and Clinton appear resigned to a nuclear Iran. Israel will not attack. I cannot believe how Obama treats our friends and welcomes our enemies.

Bloomberg in a commentary entitled the next "Big Crisis" is unfolding in the muni-bond market: The author Joe Mysak touched on some of the problems. I'll sum up his comments with one rather bleak thought: he believes that conditions in the municipal bond market almost match exactly the conditions that existed prior to the blowup that sparked the worst recession since the Great Depression. Barron's had a great piece as the lead story a few weeks ago. This will only matter when it matters.

I have some further thoughts on the "Greek Tragedy" playing out. Right now markets (investors) around the world are buoyed by a cyclical recovery and have yet to recognize the complexity of the situation. When they do it will also become apparent that Greece is part of a wider and historically unfamiliar phenomenon that of a simultaneous and large disruption to the balance sheet of many industrial countries and represents a significant nontraditional headwind to growth and financial stability. Fasten your seatbelts we're in for a bumpy ride. Read More