22 May 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!
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
- 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.
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 can brain 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.
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.
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
- 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.