Trading Routine

Had some time to spare and thought to write a post explain­ing my rou­tine. Dai­ly, week­ly as well as month­ly. Let me know what you think or if you have questions/suggestions. Top­ics I could con­sid­er cov­er­ing next per­haps. Or just say hi!

Trad­ing Routine

In this arti­cle I will break down my process in trad­ing. Not the trad­ing itself but as in what my Week­ly and Dai­ly rou­tine is. As well as my end of the month report. For those that have been fol­low­ing my blog for awhile might have noticed I have been chang­ing things up a bit late­ly. I will focus most­ly on tasks direct­ly relat­ed to my trad­ing and not things like med­i­ta­tion, work­ing out etc.. These do have an impact on your trad­ing but that’s for anoth­er time perhaps. 

My process is always evolv­ing. As I devel­op as a trad­er, so does my process. Cer­tain things I used to do, I don’t any­more. Or I do them in a dif­fer­ent for­mat. On the oth­er hand I might add a new ele­ment to my process. If this is some­thing you are inter­est­ed in then please keep read­ing. I hope this some­how adds to your own process as well. 

WARNING⚠: I tend to get long-wind­ed! You have been warned. With that out of the way. Let’s get started. 

My Trad­ing rou­tine con­sists out of the fol­low­ing elements:

• Week­ly trad­ing plans
• Dai­ly Pre­mar­ket Plans
• Jour­nal­ing
• Trades Tak­en, ana­lyz­ing month­ly stats
• Next Day Analysis

Week­ly Trad­ing Plan

Every week­end I write out a Larg­er Mul­ti-Time­frame analy­sis for the upcom­ing week. Start­ing off with a month­ly chart. Going down to the week­ly, and then last­ly the Dai­ly chart. 

This gives me a ‘big­ger pic­ture’ nar­ra­tive and lev­els price could start react­ing at. Then in my Dai­ly Pre­mar­ket Prep I include how each of these time­frames have been devel­op­ing in rela­tion to my week­ly trad­ing plan. Is it in align­ment or was I per­haps way off? I don’t like using words like con­firm­ing and such as they might make you feel as if you are able to pre­dict what the mar­ket is about to do. Which obvi­ous­ly we cannot. 

The week­ly plan gives you a ‘rough lay­out of the land’ so to speak. Which direc­tions are more prob­a­ble. Which lev­els could get test­ed. Stuff like that. Then on a dai­ly basis I look for indi­ca­tions of align­ment or mis­align­ment with this plan. Which brings me to my next point.

Dai­ly Pre­mar­ket Prep

In my pre­mar­ket prep is where things real­ly start get­ting shape. Every­day I look back at my week­ly plan and see how the larg­er time frames are devel­op­ing through­out the week. Is price test­ing cer­tain lev­els? Is there a reac­tion off those lev­els or is it sim­ply try­ing to ignore them? How is price developing? 

With gain­ing expe­ri­ence you will start real­iz­ing the way can­dles on a larg­er time frame close. As traders we focus on can­dle clos­es for our tech­ni­cal analy­sis as a devel­op­ing can­dle is sub­ject to change (duh­h­hh). But as the week pro­gress­es you get a bet­ter feel­ing for how your dai­ly analy­sis cor­re­lates to the devel­op­ment of the week­ly can­dle. And then by exten­sion to the month­ly can­dle. Let’s try an exam­ple to help visu­al­ize what I mean. 

Let’s say the devel­op­ing Week­ly can­dle (ie. not closed yet as we are mid-week) is trad­ing low­er ie. price is drop­ping. Then price tests an impor­tant lev­el and starts react­ing. This reac­tion can be seen on the low­er time­frames (H4, D1) and come Fri­day, clos­es high­er. This then trans­lates into the week­ly can­dle clos­ing with a buy­ing wick. Infor­ma­tion like this is impor­tant for us traders to know as we can lat­er on in the week go long expect­ing buy­ers to push back after a sell off or sim­ply it might be time for some prof­it-tak­ing by insti­tu­tion­al traders. 

The same could hap­pen ear­li­er in the week in the form of a pull­back and devel­op­ing Week­ly can­dle try­ing to close on its low for exam­ple. So tim­ing the right move trad­ing with the direc­tion of the devel­op­ing week­ly can­dle or against it is impor­tant to under­stand. Some­times you are right on the week­ly candle’s direc­tion. How­ev­er, you were too soon to go with it and price is pulling back first and hit­ting your stop before going in the intend­ed direc­tion. Hope that makes sense. If not, leave a com­ment and I’ll do my best to explain further. 

Back to my Dai­ly Pre­mar­ket Prep. Besides look­ing at how the day is align­ing with my week­ly plan. I incor­po­rate the H4 can­dle analy­sis as well to have anoth­er piece of that puz­zle that we traders are try­ing to solve each and everyday. 

Then, I include the open sen­ti­ment of the ses­sion. How has the (Lon­don for me) ses­sion opened in rela­tion to the pre­vi­ous day’s Val­ue Area? Is there a mod­er­ate, large, or even a huge imbal­ance at the open. Or has price opened with­in val­ue and could price see some bal­anc­ing (ie trad­ing side­ways) before con­tin­u­ing direc­tion­al­ly? Is price with­in an over­all range or are there mul­ti­ple over­lap­ping val­ues ie. extend­ed bal­anc­ing in the market. 

All these are clues to whether or not for exam­ple a sus­tained auc­tion is more or less like­ly to hap­pen in cer­tain sce­nar­ios. Of course when there is an imbal­ance in the mar­ket a sus­tained auc­tion will have a high­er prob­a­bil­i­ty of play­ing out. But at the same time if price has been bal­anc­ing for a while there could be a break out from said bal­anc­ing range. Usu­al­ly accom­pa­nied with widen­ing val­ue areas indi­cat­ing a  pos­si­ble inten­si­fi­ca­tion of momen­tum before the move. Although things like time of day and even time of year needs to be tak­en into con­sid­er­a­tion. As well as which instru­ment you are trad­ing. Cer­tain instru­ments like FX tend to con­tin­ue bal­anc­ing dur­ing the sum­mer months for exam­ple. As traders we aim to have as many prob­a­bilis­ti­cal­ly proven stats in our cor­ner as we can.

Which brings me to: Hypos.

Hypothe­ses

Based on all the infor­ma­tion laid out above I define hypothe­ses for the day’s trad­ing ses­sion. These are sce­nar­ios I think are more prob­a­ble to devel­op dur­ing the ses­sion. I usu­al­ly try to include 4 but some­times there sim­ply aren’t more than 2 or 3. For the Lon­don ses­sion there are 2 times of day trad­ing time zones (DTTZ) that can pose an oppor­tu­ni­ty. I aim to have Hypo 1 or 2 play out in the first ‘time­zone’. Then Hypo 3 or 4 pos­si­bly in the sec­ond DTTZ. Some­times I am “off” in my read­ing of the devel­op­ing nar­ra­tive and Hypo 3 or 4 plays out at the first DTTZ. 

When the ‘right’ hypo does play out in the cor­re­spond­ing DTTZ this gives me just anoth­er bit of con­fi­dence in the trade. This is due to com­ing up with these using my ratio­nal brain before the mar­ket opened. Dur­ing the ses­sion your mon­key brain can take over and can come up with the weird­est trad­ing ideas usu­al­ly detri­men­tal to your bot­tom line. I then recap in my jour­nal­ing whether or not I fol­lowed and stuck to my plan. 

Jour­nal­ing

I used to write excru­ci­at­ing­ly long essays on what I did on the day. Not unlike this blog post 🙂 I have since slimmed this down quite a bit. Also, I decid­ed to actu­al­ly write it down instead of typ­ing and post­ing it to my blog. The rea­son­ing behind this is that writ­ing things out form bet­ter neur­al net­works for remem­ber­ing. I might go back to upload­ing it (although it’s the least read part of my blog) but for now I appre­ci­ate writ­ing in my ded­i­cat­ed new fan­cy note­book I got for myself. Got a nice pen to write with as well to fur­ther improve the enjoy­ment. I am a big believ­er in hav­ing a nice work­place to work in as well as hav­ing the right tools to do them with. Noth­ing like a nice ded­i­cat­ed space to sit down at and focus on the task at hand. 

Things I include in my jour­nal are:

• Emo­tions / Focus 
  • Did I have any emo­tions and did they impact my trad­ing in any way? How did I deal with them?
  • Was I dis­tract­ed at any point? How was my cog­ni­tive state?
• Things I did well 
  • Did I fol­low my plan?
• Things I need to keep work­ing on 
  • Did I break any rules?
  • Points of improvement
• What did I learn? 
  • Any tech­ni­cal analy­sis obser­va­tions I might find impor­tant to take note of
• Addi­tion­al comments 
  • Any­thing extra I would like to take note of. Per­haps events that hap­pened through­out the day and stuff like that.

Trades Tak­en

When I take a trade I include the details of that trade in an excel sheet as well Edge­wonk 2.0. The rea­son I use both plat­forms is because I like cer­tain things from a sim­ple excel sheet. Then on the oth­er side I like the search options that Edge­wonk pro­vides. In order to do this you obvi­ous­ly need to first put in the cri­te­ria you wish to track. 

For me they are the following:

• Open Sen­ti­ment
• Imbal­ance, based on open sentiment
• Entry TPO
• Day of the Week
• Which hypo
• Which DTTZ
• Trend
• Stop Loss sizing

I aggre­gate these stats to give me a bet­ter insight into my per­for­mance. Based on these stats I learn that in cer­tain con­di­tions I per­form bet­ter than oth­ers. I used to not per­form well dur­ing C TPO so I then decid­ed to stop trad­ing dur­ing that time. I then learned more through tri­al and error, back­test­ing, for­ward-test­ing using paper trades. Since then I start­ed doing well in trades tak­en dur­ing C TPO. 

Oth­er fac­tors like what day of the week do I per­form bet­ter? What kind of an imbal­ance favors my personality/style? Could I get away with hav­ing a tighter Stop Loss or am I get­ting stopped out all the time before mar­ket moves in my intend­ed direc­tion? These are just exam­ples of the kind of infor­ma­tion you can derive from track­ing these stats. 

In order for your con­clu­sions to have any sig­nif­i­cance you need at least 50 trades but prefer­ably much more than that. At the end of each month I look at my data and see which areas I was lack­ing in. Which areas I per­fomed well in. This I include into my month­ly report sheet which is an Excel sheet. I should say Google Sheets as I most­ly work off Google Dri­ve. Some exam­ples of month­ly reports can be found on my blog. 

Next Day Analysis

This is some­thing I have recent­ly incor­po­rat­ed into my process. I was already doing it in one form or anoth­er but I want­ed to make it more of a focus. Before I would focus most­ly on the trade I had tak­en. Now, I focus on if my hypos have played out or not and how well (or not) I was aligned with the devel­op­ing mar­ket nar­ra­tive. I am not say­ing that I was pre­dict­ing any­thing in advance. Mere­ly stat­ing that I had an obser­va­tion of what could devel­op then com­par­ing it with what actu­al­ly devel­oped. How did it devel­op? When did it devel­op? These notes help solid­i­fy my knowl­edge of the mar­ket as well as raise con­fi­dence. On the oth­er hand it takes the pres­sure off by not just focus­ing on the trades them­selves. To me it is more impor­tant to be aligned with the mar­ket. Then exe­cut­ing on that align­ment is a very close but sec­ondary factor. 

Let me know what you think of this. Share your process. Or just say hi. I’ll occa­sion­al­ly upload posts like this. If you have any sug­ges­tions on what top­ics to cov­er feel free to let me know. 

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