Top 5 Daily Habits of Experienced Traders

Success leaves clues, and over the years as an educator and coach, I can confidently say that there are several things that traders who achieve positive trading outcomes appear to do, that less successful traders are not doing. One of these is to have a daily agenda or habits that go alongside direct trading activities with the aims of getting and staying in the optimum “state” to trade and to facilitate consistency in action.

Here are 5 observations to consider…

#1 – Check in on your potential “trading state” before you look at the market

We have discussed in previous articles the advantages of making decisions when you are in an optimum state to do this. I highly recommend you read my 10 Ways to Manage Your Trading Psychology – a Blueprint for Development post if you haven’t already.

If one constantly interacts with the market, consistent and constructive action may be more difficult. Therefore, logically “checking in” where you are before you start your trading day becomes even more necessary. It may be there are things going on in your non-trading world that are significant enough to be a justifiable distraction and require attention, or you are not in the best of health.

However, it’s important to realise that the markets WILL always be there. There are times when it is good to trade and times when you should give yourself permission not to.

#2 – Re-align with trading purpose and plan at the start of your trading day

Your trading purpose, or your reason for trading, is your start point for developing strategies that are consistent with your trading objectives.

Your trading plan is your “guiding light” in making this purpose happen.

Every trading decision should relate to these, and without it, traders have a lower chance of creating the trading outcomes they desire.

In the “heat of the market”, it is easy to get “sucked in” to the price action of open trades as you see your trading capital moving up and down. Without the explicit instruction of a pre-prepared plan, it becomes more difficult to maintain the consistency and clarity that it is already characteristic of experienced traders.

Touching base, or re-aligning with these at the start of your trading day offers a reminder as to the why and how you will think, decide and act in the hours to come.

#3 – Make a judgment on what to expect

Every day the market throws up different challenges, different price movements, volatility, and new economic information, influencing overall market sentiment.

Advanced traders take the time to make an overview judgment on what is happening and adjust decisions on time-frames traded, risk level or chosen strategies, accordingly.

For example, one of the possibilities we have discussed in a previous article and in Inner Circle sessions is the concept of adjusting risk level according to the strength of the signal or underlying market conditions. What we mean by this is that if our normal tolerable risk level is 2% of our trading account capital on each trade as a standard and we note increased market uncertainty indicated by higher price volatility, but identify a potential opportunity for entry, we may adjust that risk level to 1% in light of this observation.

Having a system to make a judgment prior to trading allows this sort of approach to be taken, making it an unquestionable attribute of an experienced trader.

#4 – Check in with yourself at key points during your trading day

Your emotional state can, and often will change throughout your trading day, primarily dependent on either the results you are getting or your judgment on performance.

We are all familiar with the concept of ‘revenge trading’ if a trade, or series of trades move against you. This is at the extreme end of capital damaging emotional state.

Equally and more insidiously dangerous is a succession of wins or losses where your consistency may waver, either originating from a belief that you can perhaps “feel the market” or begin to doubt yourself as a trader.

A potential solution is to have it written in your plan that if either of these scenarios is the case, then you could move away from the market for a period of time, enabling you to reset, re-align and revisit the market later on with a refreshed sense of purpose and plan.

#5 – Review your day including completion of journaling tasks

Formal review of performance is a critical part of on-going trading development. We have discussed many times the benefits of keeping a journal record of your trades, within not only measure outcomes, but the decisions that were taken to create these.

Completing your journal daily may identify common threads of both things that went well (and you can mirror going forward) as well as potential areas for development.

Experienced traders who do this give themselves that important chance of sustainable growth which appears to be a key factor in long term trading outcomes.

To summarise, you always have a choice as to whether you integrate what you read into your trading. In this case, it is the choice of having a daily agenda that can contribute positively to your long term trading strategy.

Every week I run education webinars offering innovative and comprehensive learning across all aspects of trading knowledge and practice. If you would like to expand your knowledge and build your confidence as a trader while also connecting with other Forex and CFD traders, register here.