Too many new traders think that being successful in the markets boils down to having the “right strategy.” It’s true, if you’re trading a strategy that doesn’t have edge, you won’t make money in trading. However, have you ever notice that some traders use chart patterns to generate ideas while others might focus solely on news or fundamentals? You see, there are a number of different styles of trading that work in the market, but the one thing that successful traders have in common is that they’ve developed winning habits. That said, let’s take a look at some daily habits to make you a better trader.
4 Daily Habits to Make You a Better Trader
How do you start the trading day? Do you log on to your computer a couple minutes before the market opens? Are you multitasking, chatting with friends, writing emails, having one eye on the markets and another on something else?
Successful traders are up early in the morning. They are checking the foreign markets to get an indication on how the U.S. session might open up, run through headlines, see what companies have been upgraded/downgraded, as well as, look at the corporate and economic calendar.
Websites like Econoday offer a free economic calendar that makes it easy for you to keep up with events.
Now, if you’re someone who trades volatile stocks or event driven strategy, Yahoo Finance offers a solid earnings calendar.
Source: Yahoo Finance
Additionally, you could use EarningsWhispers to stay up to date on earnings announcements.
Of course, if you primarily base your trades off chart patterns, you want to review your charts for potential levels of entry. Create a list of possible names that you’ll be trading for the day.
As you can see, if you’re just turning on your computer minutes before the market opens you’re doing yourself a disservice. The best traders set themselves up for success and it starts with preparation.
If you owned a store it makes sense to track what your best and worst selling items are. Along with what your profit margins are. Well, if you viewed your trading like a business, wouldn’t want to know what your best trades are. For example, is it a certain catalyst that you trade well, chart pattern or sector you trade well?
The only way you can figure this out is by reviewing your trades and journaling your performance. After you’ve got grasp of your strengths and weaknesses, simply focus on what you do best and eliminate the stuff you do poorly.
Some traders will use services like Evernote and Google Docs to journal. However, if an old school notebook will work. The most important thing is to study your trades to identify your strengths and weaknesses.
The best traders are not doing it alone. They usually work in teams, exchanging ideas and feedback amongst each other. Back in the day, this meant you joining a prop firm and moving to one of the big trading cities like New York or Chicago. However, it doesn’t matter where you live now. All you need is an internet connection to join a trading chat room to gain access to hundreds of traders. Moreover, it helps to learn from people who are experienced traders.
You can learn a lot by asking questions and teaming up with other like-minded individuals. Whether your goal is to increase your trading size, learn a new strategy, or better handle your emotions– communication will help you get there faster. Joining a trading community is one of the best investments you can make for your trading business.
Treat Yourself Right
When money is on the line it’s hard to keep your emotions in check. It requires focus and mental clarity. After all, trading is simply high level decision making. Now, if you’re not getting enough sleep, eating poorly, and not exercising, it will eventually catch up with you. Start putting your health first.
According to the National Heart, Lung, and Blood Institute even losing 1-2 hours a night can have heavy consequences, lowering your ability to function as if you haven’t slept for a day or two. Think about what it can do for your focus. It’s been estimated that sleepiness is the cause of over 100,000 driver accidents each year.
Want to boost your trading performance?
Start exercising. According to the Anxiety And Depression Association Of America, exercise produces endorphins which can act as natural painkiller and improve your ability to sleep and reduce stress.
And you know what else? What you put in your body can also affect the way you trade. According to Harvard Business Review, food has a direct impact on cognitive performance. Consider adding more fruits and vegetables to your diet as they’ve been proven to enhance mental performance.
The bottom line
According to the Foundation for Economic Education, simple habits can be formed as in little as 21 days. However, more complicated habits take longer to form. Be patient and enjoy the process. As you move along your journey as a trader you’ll learn that it’s a lot more than just having the right strategy. Follow these daily habits to become a better trader, and you could be on the right path to success.
Jason Bond runs JasonBondTraining.com and is a swing trader of small-cap stocks.