As we announced in last week's newsletter, this month's trading theme is "Trading Routines".
This week's lesson comes from our "in-house" risk expert - certified risk manager and frequent contributor, Michael Toma, who shares some perspectives on the power of routines and the benefits of triggers in cueing desired behaviours and actions.
Given all the things you can’t control when trading, I guess it’s only fitting to cram in all the things you can control - our actions, tools, strategies, and of course, our crazy routines.
I’ve heard some wild ones throughout my career but in the end, it’s the trader themselves who is comfortable with their rituals supported by endless belief in its value.
Can these routines we praise actually trickle down to make us more successful?
When the topic is discussed at our upcoming meetup on September 19, I’m confident there will be at least one routine that each attendee follows with a passion.
I have some quirky ones like simply saying ‘I don’t care’ before each session of which I’m convinced brought me to the next level in my trading 10 years ago.
For me, this and similar pre-market spoken commitments worked and continues to help me separate my role of executing strategies without the psychological influence of money.
Can we place a value on our routines?
Seems like some cannot trade without them.
Can we determine if our routines are tactical or help our psychological capital bucket?
Those tactical in nature would focus more on reviewing strategies, backtesting or what to look for on a chart during the live session.
When do we conduct our tactical routines? Pre-market? Post? I can’t calculate the number of sleepless nights dragging myself downstairs to look at chart patterns. Don’t even get me started on Saturday mornings. You too, huh?
In my teachings, most new traders have an imbalance between filling their tactical routing buckets vs. their psychological ones.
Trying to discover the next holy grail can absorb most newer trader routines and neglect what I feel is the most critical part of the daily routine; that being the establishment of psychological triggers.
Triggers are regularly timed events that remind or reinforce an action to aid in your success. Since many personal routines occur in the morning, it won’t take much effort to identify occurrence’s that happen daily or at least during trading days as reminders to do something productive for your business.
Brushing your teeth? – a reminder to get the overnight futures price range. Morning coffee? – that’s my trigger to remind me to trade my plan. Taking your kids to school – perhaps a reminder of why we are doing this in the first place and to reinforce a commitment to success. I had a student who drove past his old work building each trading day as a reminder of the thought of going back to the job he hated.
Take a few bullets from your plan and read them before the open as part of your routine. Better yet, read a quick purpose statement to remind yourself what you’re here to do today.
Better yet, read a quick purpose statement to remind yourself what you’re here to do today.
What I find works is having a set of bullets to reinforce an "If I don’t" reminder, such as not being able to trade the next day if I’m not being trade compliant. These trading platforms are so enticing to allow you to trade more at will and make the foolish decisions that we only regret after the market close, better known the "what **** happened" routine.
These trading platforms are so enticing to allow you to trade more at will and make the foolish decisions that we only regret after the market close, better known the "what **** happened" routine.
A few other ways to help evaluate your routines? Get others involved. Spouse, fellow trader, anyone. Even a good morning hello to a fellow trader can act as a trigger to set the morning routine in
Get others involved. Spouse, fellow trader, anyone. Even a good morning hello to a fellow trader can act as a trigger to set the morning routine in compliance and then help each other to assure you both don’t slip during the session.
I’m a compliance junkie so most of my routines involve around executing my plan rather than charting and the like.
In essence, my routines are really not routines at all, but a reinforcement of my trading plan rules. I find this reinforcement still works for me and minimizes my what happened routine on the weekends.
When you can use routines to identify areas of improvement or measure the value of these rituals and connect them to your bottom line, you’ve taken a very valuable step towards trading success.
So make it a routine to evaluate ….your routines.
Sound like fun?
We’ll …maybe. I’ll have to think about that during my upcoming Friday routine. This week it’s Chardonnay.
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