Trading routines

Trading routines: build the habits of top traders

I went from being a bad trader to a good trader after changing this thing only. Afterwards, I couldn’t believe how simple it was. However, it required a different mindset.

 

The secret? Trading routines.

 

Routines or habits are extremely powerful. Marathon runners have the strength to finish a 42km run because of it. No runner is capable of enduring a marathon just like that. Instead, they make the conscious decision to start training. Using an intense routine, they see improvements day after day. Getting closer to running that full marathon. Pushing limits and improving until you make it to the finish line.

 

Marathon running

 

Trading is not that different from running a marathon. We start out by knowing little to nothing about the markets. Day by day, we learn how to trade, interpret candles, patterns and market behaviour. We learn what works and what doesn’t. Some traders find out trading is just not for them or discover other priorities in life. Others persevere. They continue chipping away at the wall that stands between them and trading profitably.

 

Both marathon runners and traders make it because of their routines. It’s an endurance play, without shortcuts. Forget the get-rich-quick attitude. A marathon can’t be finished without training. Similarly, consistent and profitable trading doesn’t happen without continuous improvement. That’s where trading routines come in.

 

The value of trading routines

 

Value of trading routines

 

Of course, I don’t mean routine in the boring, creativity-depriving sense. Routines should be created to improve your life and enhance creative thinking. If that’s not the case, scrap it. Going outside for a smoke at 3 pm every day is also a routine, but it’s obviously detrimental to your health.

 

 

We are what we repeatedly do.

Excellence, then, is not an act, it’s a habit.

– Aristotle

 

Trading routines are the embodiment of “process over profits”. You focus on executing the same trading processes every day, week, month. It becomes a habit and before you know, profits follow. I remember when I was reading Market Wizards by Jack Schwager, I noticed that so many top traders said they have meticulous record keeping. Their pre-trading prep time and evening trade reviews were holy to them and even more: they were key to their success.

 

During the years, I’ve refined my trading routines many times. They’ve become an indispensable part of my trading system. I spend much more time going through some of my trading routines than actually trading.

 

Trading routines help in multiple ways:

  • They provide you with a regular feedback loop
  • They keep you focussed on following your trading plan
  • Research shows that following routines strengthens your willpower
  • They are a substitute for when motivation is low (e.g. after a losing streak)
  • They allow you to make measurable steps to reach goals

 

Of course, you should be careful to create routines that actually bring value and not routines that influence your trading negatively. For example, you could create a routine where you look at the 1M charts for 4 hours a day, but chances are this won’t improve your trading. Watching social media for 2 hours each day and blindly following advice from others also seems rather unproductive. On the other hand, having a routine to review your trades can be highly useful and an effective way to improve.

 

 

My trading routines

 

I have created these trading routines throughout the years. Many of these routines have allowed me to stay disciplined, find areas to improve my trading, be adequately prepared for every trading opportunity and more. Although they are highly personal and work for me, I urge you to use these as inspiration to create your own trading routines. Let’s go over them step by step.

 

 

1. Weekend routine: watchlist

 

Trading watchlistFor me, every trading week starts the weekend before. Making the trading watch list probably takes me about an hour or two. As I mostly trade 4H charts, I plan the setups I’m interested in on the weekend and create a watch list for the upcoming week (and often publish a selection of the pairs I’m watching in my weekly forex outlook).

 

I use Tradingview for my watchlists and have created two lists:

  • Forex watchlist
  • Weekly watchlist

 

The first contains all the forex pairs I’m monitoring (around 30) and the second one contains the pairs I have selected for the upcoming week. My process for creating the watch list is as follows: I go through the ± 30 forex pairs and scan for setups that look interesting to me.

 

I add every pair that shows potential to the weekly watch list and write it down in my trading notebook. I add a short note on what I’m looking for, as well as a “setup rating” (A, B or C). Next to selecting interesting pairs, I also look at currency correlations and a couple of indexes and futures markets that can give me a clue about the overall market (such as DXY, S&P500, DJI, VIX, Oil).

 

Trading watchlist

 

Rigorously doing this every week gives me a group of setups to focus on. During the week, I’m not distracted by anything else and there’s no need to “hunt” for setups. Tradingview lets me set alerts on the levels where I want to take action or be notified. So during the week, I require little actual chart screen time.

 

 

2. Daily morning routine: prepare for the day

 

Every morning, I prepare for the trading day. The whole process usually takes me between half an hour to an hour, so it’s not too time-intensive. I start off with 20 minutes of meditation, as it clears my head and allows me to focus for the upcoming day.

 

Morning trading routine

 

Afterwards, I have a first look at the markets: I check my open positions if I have any and have a look at the global market news (usually on Bloomberg). I sometimes put on Bloomberg TV, although there is also much noise on there. I just like it in the background 🙂

 

When I have a general idea of global financial news, I move onto the economic calendar for the day. I look for high-impact economic news releases and note them down in the same trading notebook where I wrote down my watchlist pairs.

 

Next, I move onto my watchlist. I look at what happened overnight in all the pairs I’m following for that week. During this routine, I take note of things I find interesting: big moves, patterns, new levels, etc. I might create pending orders for setups that have progressed far enough to warrant a trade (although I don’t often use pending orders, but that’s just me).

 

 

3. During the day: monitor and take action

 

Monitoring tradesDuring the day, very little work is actually involved. The reason is threefold:

 

  • I have my weekly watch list
  • I know how I want to play potential setups as they unfold
  • Alarms are set every 4H

 

 

 

The alarms let me look at the charts every time a 4H candle has closed (which is the only time I take action anyway). Every 4 hours, I loop through my watch list and see if I need to do anything. I do follow up on important fundamental news like NFP or central bank announcements, though.

 

 

If I plan to take a trade, I will first go over my trading checklist and make sure I can check every box on there. After I take a trade, I will note it down in my trading journal, together with an as detailed report of why I think this trade is valid and how my emotions are (confident? greedy? uncertain? etc). If you wait to do this, a lot of the finer details are lost so I do this right away.

 

 

4. End of day routine: review and trading journal

 

At the end of the day, I will do two things:

  • Run through my watch list and check what has happened for the day
  • Review any trades I took and finish entering them in my trading journal

 

I keep this short and sweet since I mostly take my evenings off. This trading routine will take me around half an hour.

 

 

5. Weekend routine: review past week’s trades

 

Trading journal review

 

This, together with the weekend watch list routine, is probably the most important trading routine I have. Every weekend, I will go over my trades in detail, looking at every aspect of it:

  • How were my entries? Too early, too late?
  • Did I follow my trading plan on every trade I took?
  • How were my exits? Did I leave profits on the table? Should I have let my trades run instead of taking profits early?
  • Have I missed trades I planned on taking? Why?
  • Was I right about what I thought the market would do during the week?
  • How did I perform emotionally? Did I let my emotions get the better of myself?

 

I take my chartbook (thanks, Edgewonk!) and process my trades visually. Do the same setups look alike? Did I not notice certain chart patterns?

 

In short: how did I do, what could I have done better and what did I do right?

 

 

6. Weekend routine: research

 

Busy creating MT4 Expert Advisors to validate some of my strategies. I ❤️ to see that equity line go up like this! 🚀📈👌

A photo posted by Smart Forex Learning – Felix (@smartforexlearning) on

 

This is a fun one, and I try to do this every weekend. My research trading routine is where I go look for potential improvements to my trading in general. These can take many forms, but the following are the most common:

  • Read a book about a trading subject I want to know more about.
  • Backtest a strategy in MT4 by writing an Expert Advisor.
  • Doing manual strategy testing in ForexTester 3. Forex Tester legitimately rules for doing step-by-step testing that mimics actual trading.
  • Going in-depth on my trading journal and find ways to improve it.
  • Read up on my reading list on Instapaper (usually articles I find during the week but don’t have time to read).

 

This research routine can be very rewarding. I’ve discovered new strategies, tools and processes like this, found new and more effective approaches to trading and more. Also, since I will never take someone’s opinion for granted, this is where I will validate certain hypotheses and see if they hold any value.

 

On the other hand, this is also where you could potentially lose a lot of time by going down roads that lead to nowhere. Your job is to identify the topic that will bring you most value as a trader and focus on those. Are you having difficulty with following your trading plan? Maybe read a book on trading psychology. Not sure if your strategy actually has an edge? Learn to backtest and back it up with statistics. Just starting out? Make sure you know the basics first before moving on to more advanced topics.

 

7. Monthly routine: review trading month

 

The header says monthly, but I do this every 1, 6, and 12 months. This is just a general review of my trading performance in the last month(s). Every 6 months, I will re-evaluate my trading strategy and check if it still works in the current market. This is also the only time where I would consider making big changes to my trading system (since you need a large enough sample size to evaluate a trading system).

 

Basically, this is a review moment to see if I’m still on the right track. If so, good. If not, how can I readjust in order to get me back on track?

 

 

Conclusion

 

Top trading routines

 

Without any doubt, these trading routines have shaped how I trade more than anything else. When I started out trading, basically I was reacting to the market constantly. Chasing the price, not having a plan, not knowing if I was doing well and how to improve. This changed after implementing various trading routines.

 

Trading routines allow you to focus on the tasks that will bring the most value to you as a trader. Cutting away all the background noise. They implement specific feedback loops in order to improve. They made me the trader I am today.

 

If you want to implement some trading routines as well, I can recommend the following order:

  • Start by having a defined trading plan and trading journal. This is paramount.
  • Implement a watchlist. This allows you to focus.
  • Review your performance often. This allows you to have a feedback loop.
  • Research and keep on learning. Because if you don’t, you’ll get behind.

 

Good luck trading!

 

 

Are you also using trading routines? Let me know in the comments which ones I’m missing!

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Felix

I'm a full-time, independent forex trader. I've been trading for over 10 years and specialise in reversal trading, trading psychology, algorithmic trading and coaching others. When I'm not trading, I'll either be travelling the world or rock climbing (likely both). Read my story here.

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