The 3 Hardest Things in Trading
Part 3: How to Build a ‘Sticky’ Trading Routine
In episode 61 of the Two Blokes Trading podcast, Andy Demi of the London Trading Group gave a masterclass in motivational podcasting! Central to Andy’s attitudes to success and living a life that will “leave a mark” is controlling his environment. Key to controlling your environment is controlling your routine. In this case, controlling your trading routine.
This is a consistent theme amongst the successful traders I have met doing this show. Frankly, having a solid routine is a consistent theme amongst successful people I have met in all walks of life.
What Does it Mean to Have a ‘Trading Routine’?
By Trading Routine I am not just referring to the two or three things you do before you sit down at your screen – get a coffee, open up 3 screens, check Twitter – although this is important. (Especially coffee). Rather, I am referring to the manner in which you construct your life to enable you to trade successfully.
When do you get up, go to bed, get to your desk. How do you exercise? How do you relax? When is your scheduled time for analysis, for reflection, for entering everything in your trading journal. Do you set aside time for constant backtesting of existing systems, and trialling new ideas? If you can’t answer these questions then that probably means you won’t do any of it.
If, like me, you are a fan of the self-help book (sorry, I mean ‘personal improvement’ book), then you will doubtless have read a bunch about productivity and efficiency. It seems to be the one thing that binds all busy metropolitan types together – none of us seem to have enough time!
Whether you are swing trading around a job, or day trading for a living, life will get in the way of your trading if you let it. In order to have an established trading routine, you need to have an established life routine.
Why is Having a Trading Routine Important?
As they say, the Market is a cruel mistress. Capricious and unpredictable, it will part a fool from their cash in the blink of an eye. One of the biggest ways traders lose money is by rushing into trades that they have not fully prepped for, because they are worried about ‘missing the opportunity’.
This has happened to me on many occasions, and is usually because I wasn’t sat at my screen prepping when I know I should have been. Had I followed my trading routine I would have had time, for instance, to check the economic calendar and realise that an inflation data report was due. And I would have had fewer total blow outs!
No one ever become a chess grandmaster, or wrote a bestselling novel, or won an Olympic medal without having a strict routine. A lack of routine means excuses are easy to justify and distractions are harder to avoid. It is also harder to convince loved ones that they need to Get in the Sea while you are backtesting, if you haven’t told them in advance that ‘sorry Wifey/Hubby I always backtest at 2.33am on a Tuesday morning’.
Trading is one of the hardest skills you could ever set out to learn, and one of the costliest activities on the planet if you suck at it. Having a solid trading routine is the only way to ensure the focus needed to win in a competitive-as-hell game where winner takes all and the loser goes broke or quits.
Construct Your Trading Routine to be Sticky
1) Do What You Enjoy
One of the key bits of advice that Andy gave us in the interview was to pick a routine that works for you. Or, put another way, pick a trading routine that you know you will stick to.
It is similar to the best bit of exercise advice I ever received – do a form of exercise you enjoy.
For example, I absolutely hate swimming. Large bodies of water were created for me to lounge around in, sipping cocktails. But I’m always hearing from well meaning people who know that I like my phys who say ‘you know swimming is one of the best forms of exercise there is’.
Tom has even managed to get me into the pool on occasion for a few dozen lengths. And I bloody loathed it. All that flapping and drinking water, and goggles that won’t stay on. It’s bullshit! If I sat down today and wrote a 3-day-a-week swimming programme to build cardio and muscle definition then I’m sure I’d be extremely psyched about the potential results.
But I know for a fact that I’d still chin it off almost immediately.
Any other routine is the same, including trading. If you pick up a system that requires you to do 2 hours of research before the London session opens at 7am, but you know that you hate mornings, then you simply are going to fail.
Similarly, if your system requires you to be picking trades at the end of a daily candle at midnight, but you normally nod off every evening during the ten o’clock news, then it’s probably not right for you.
The first step in getting a trading routine is to design one that you know you’ll enjoy, that plays to your personal strengths. There is no single ne trading system that you must use – there are hundreds that work – find one that enables you to have a routine works for your personality.
2) Do What Works Around Your Life
Controlling your environment is also about accepting your environment. If you have a baby that wakes up every morning that 5am, don’t plan on going to bed at 1am. If you play football or netball on saturdays and often go for drinks after, don’t pencil saturday afternoons in for your trading analysis. ‘Oh it’s fine, I should probably booze less anyway’. Yeah right.
The person we are when we are writing plans, and the person we are when tempted by beers with our mates is not the same person. Plan for the person you know you really are and control what you can control.
3) Work Around Your Primary Source of Income
Until recently I day traded Forex using a mixture of fundamental data and sentiment, with Fibonacci retracements and support and resistance line for extra confirmation. It is an established style, most notably advocated by Jarratt Davis, and of course, Brandon ‘The Boss’ Turner.
I was just getting good at it, really getting my eye in, and turning up profitable weeks when I quit. Why?
I quit because I couldn’t turn those profitable days and weeks into profitable months (and by extrapolation, profitable years). I couldn’t do this is because I simply couldn’t get into an established trading routine. I would put together a run of three days of solid trading and then – oh shit! I’m recording a podcast, seeing my account and rewriting a contract today! Out the window goes the trading. Life, business, other things got in the way.
The fact is you cannot trade the sentiment without doing it full time every day. It is probably the most labour intensive way to day trade. My personal belief is that it is probably the best way to day trade Forex, but I will have to wait until another life to find out for sure.
Like many people I simply don’t have enough cash in the bank to exclusively day trade for a living and still guarantee the mortgage is paid, the school fees are paid and the car stays on the road. So business is essential for me to live, but I still want to trade.
So, I accepted that for me, at least for now, I have to Swing Trade. I have to learn how to trade around my other commitments. Once I’ve written a bestselling autobiography and sold the screenplay (starring Channing Tatum as our hero ‘Owen’, with Danny DeVito playing the best friend and comedy relief ‘Tom’), then I can go back and look at day trading. But don’t worry folks, when I’m Hollywood big-time I’ll still find time for TBT.
If you have business and work commitments, commit to them. They are probably going to make you more money than your trading anyway. Don’t let them suffer – you’ll need the income to fund your trading account! Instead, learn to trade around your commitments, control your environment, set a plan, and stick to it.
How Do I Stick to My Trading Routine?
The above advice will help you build a sticky trading routine that works for you. When people ask me ‘how should I choose a trading system’, the first thing I tell them is choose one that fits the rest of their life. If you have done the above, then that is first and biggest step to ensuring that you choose a trading routine that you will stick to.
However, there are a number of other key steps you can take.
1) Set SMART Goals
When I asked Andy Demi how he made sure that he actually got up every day at 4.30am (4.30am!) he said one thing: Goals.
I defy you to find me a single billionaire who doesn’t set goals. Or an Olympic gold medalist who didn’t know exactly what they wanted to achieve before they started. If you don’t know what you are aiming for, then the minute you have struggles you are in danger of quitting.
This also applies to a routine – if you just create a routine for the hell of it, and then something more instantly gratifying comes along, you’ll blatantly sack it off because ‘I’ll definitely do it tomorrow’.
Most people know what a SMART goal looks like, so I won’t go into much detail. But basically: Specific, Measurable, Achievable, Results-based, Timed. (There’s a billion different versions – Mind Tools is good for this sort of thing.)
Decide what you want your trading year to look like, then you month. Then work out what you have to achieve each week, and what that means for each day. Write it down. Do it.
2) Tell Your Family / Business Partners
Why does every single Oscar speech start with (after the crying) some Luvvie thanking their family? Because they genuinely couldn’t have done it without their support. For me ‘support’ doesn’t necessarily mean ‘help’. Mostly it means ‘not complaining when I am unavailable because I am working hard to achieve my goals’.
My wife knows that I am going to be sat in front of the screen at 10pm every night placing my orders. She knows why; she knows what I am trying to achieve to help our family. As a result she doesn’t try and stop me or get in the way. If I hadn’t explained it to her then she’d probably get pissed off that I was sat in a dark little room upstairs every evening and probably think I was trying to avoid her!
Equally, Tom and I both know when the other guy is trading. We also know what the other guy is trying to achieve in trading. If that gets in the way of the various business dependencies we have on each other, then so be it – we’ll have to be flexible and respect each others’ trading goals.
3) Get Skin in the Game
When I first learned the MPR trading system from Traders Support Club I initially started to demo trade it, on their advice, just to make sure I understood the methodology. This was good advice, but the trouble was that I kept sacking off my analysis sessions. Who wants to stare at screens at 10pm if the outcome of the trade actually has no meaningful impact on their lives?
But, now that I am live-trading the system, you can bet your arse I am sat in front of that screen when I should be. Now that my actual cash is on the line there’s no bloody way I won’t stick to my trading routine.
Ali from Traders Support Club recognised this pattern of behaviour and said it was also common amongst traders who only have small accounts but have large personal incomes. If it doesn’t hurt when you lose or feel good when you win, then being a focussed trader is actually even more difficult.
Just don’t put so much skin in the game you start letting those emotions control your trading, rather than just motivating you to smash it on a daily basis.
Design it, Write it Down, Stick to It.
Creating your trading routine is a bit like writing a revision timetable when you are doing your GCSEs; it feels like productive work, but can actually be a placebo. Just as eventually you will actually have to do the revision, so to you will actually have to do the trading analysis, journaling and backtesting.
If you are like me, you will enjoy making grand plans. Partly I suspect this is because in my mind I assume that I will follow it perfectly, which means I have basically achieved my goals already (right!?) and I feel like a hero. But, writing the plan is easy; sticking to a plan is bloody difficult.
I hope this has helped you to build your own sticky trading routine. I honestly believe it will revolutionise your trading as it has mine.
Just remember to dig deep for the discipline, visualise yourself achieving your goals every single day, never let yourself skip one session or make one excuse, and hold yourself accountable.
If you are interested in learning from the same trading mentors as Owen and Tom, and seeing what the MPR trading system is all about, then sign up for 3 months free with Ali and the Traders Support Club here.