I recently saw a documentary about Bill Gates on Netflix and the thing that struck me most was that he wasn’t one of the richest people in the world through luck or inheriting large sums of money. He literally reads like 8 books while traveling, he can read 150 pages an hour and he enjoys learning. One of his close friends said, “Bill always knows more about a subject than the person he talks to.” What does that have to do with trade? Everything…
The key to trading success is developing into a profitable trader by learning to trade correctly and being consistently disciplined to follow an effective trading routine until it becomes a habit.
Here’s what you need to know about trading routines: Trading routines are the real key to success in the market. There is no magic indicator or algorithmic trading robot that easily makes you a profitable trader. Just like Bill Gate’s routine has led to insane financial success every day over the years, so can your trading routine. However, if you have no or the wrong routine, you will never become a successful trader. Could Bill Gates have watched TV Cheetos eat all day instead of reading everything he could get his hands on about business and programming? For sure. And you would never know who Bill Gates was if he did.
A “fire” is burning in Bill Gates. a desire to learn, to grow, to be more, which seemed partly innate and partly developed in childhood. I cannot provide that to you. You have to develop it if you don’t have it. But I can give you the framework, so to speak, the “keys” to the “kingdom”, but you have to be in the right trading mentality to “turn” the key. When you’re ready, read on and learn the daily trading routine that has worked for me in the market for the past 10 years.
The main ingredients of my daily trading routine
- My trading routine involves far less interaction with the market than with many other traders. This works for me and I firmly believe that it will work for you for the following reasons: Less stress, less time to mess up your trades through excessive commitment, low trading frequency, impart discipline, you only control yourself and try not to control the market.
- My overall approach is to focus on end-of-day data, which means that I focus on the timeframe of the daily chart and usually wait until the market closes each day to really sit down and take a close look at the markets in my watch . This is what I call a part-time trading routine, and it not only has the benefit of less screen time (so you can do other things), but the fact that you spend less time on the charts will actually improve yours Trading performance in the long run.
- First I take a weekly view: I check the timeframes of the weekly chart, draw in the key levels, get a feel for the short-term and long-term trends and note down all the obvious / large reversal signals for price promotions.
- Next we look at the timeframe of the daily chart. We are mainly looking for important support and resistance levels, the current and current market conditions: trend or sideways movement? And last but not least, let’s take a look at the PRICE ACTION Are there any signals that may have formed near the key levels? Are there signals that have formed after pulling back to a level? Note: Levels can be horizontal support or resistance levels, or EMA – exponential moving averages, or even 50% return levels.
- Since this is just a blog post, I have to “gloss over” some of the more detailed topics like money management, trading psychology, stop loss placement, etc. However, you can follow the links I just provided to learn a bit more and of course these topics are covered in much more detail in my professional trading course.
- What is the glue of all of this? From my entire trading process? Simple. It is routine – discipline – habit or RDH. Let me explain that to you (it’s critical) – Do you remember my previous mention of Bill Gates? Bill Gates probably has better habits than you (or me, to be honest), so does Warren Buffet. The world’s elite, those men and women who have accumulated large fortunes or are otherwise successful in their craft, have become habits through routines that require discipline. The engagement is unreal, but honestly that’s what it takes. Bill Gates doesn’t read that many books because he hates it, he does because he really loves it! So you really have to love trading and you have to love routine and discipline if you hope to convert them into real trading habits. Proper trading habits bring you prosperity in the markets. There is no easy way or shortcut except REALLY to love the process. And remember, I can show you my process, the one that worked for me, but it’s up to you to LOVE it, to be passionate enough about the process to make it work!
My daily trading process: chart analysis and trading execution
The first important chart aspect of my trading routine is to get a bird’s eye view of the markets on my watchlist. This usually means starting with the weekly chart time frame and repeating it again. I’m mainly looking for key levels in the market, key turning points, trends and areas of consolidation that I can take note of. I always mark the key levels on the weekly chart first. Here’s an example:
Next, I’ll use a time frame of the day and analyze it in a very similar way. Depending on the price action, the key levels of the week may need to be adjusted somewhat daily, or you may need to include additional levels:
Now I’m analyzing the short-term market conditions to decide which direction is best to trade and which nearby levels / areas are most important. I will often use a moving average like the 21 EMA or something similar to see the short-term trend and momentum. You also want to learn how to identify periods with higher highs / higher lows and lower highs / lower lows. For more information, see my article on identifying trend markets.
Finally, I’m looking for price action signals / potential trades. I am particularly looking for “clean and obvious” signals that match the levels on the graph, in other words that flow together.
- What you saw in the charts above is a brief overview of my weekly / daily chart analysis that I do for all markets in my watch list. If you don’t have a watch list, you should read my article on creating market watch lists for more information.
- Markets go through phases. Study the markets you like best in your watch lists and you will get to know and become familiar with them. If you see that some or most of them are in a bad trading phase or a side consolidation that is choppy, just look at them and walk away or not even check them for a few days. The best trading phases or conditions are in trend or when markets are trading in very defined and larger trading areas.
- I can’t hit that in your head enough: MOST DEALERS ARE LOSING BECAUSE THEY CHECK THE CHARTS TOO MUCH DAMNED! The market is not meant to be a casino, so don’t treat it as one. Don’t be addicted to it! See and treat the market as a way to show how planned, competent and disciplined you can be and you will be well rewarded for it.
How to find, set up and execute a trade
After following the steps above, let’s assume you recognize a potential trade. Here’s how I’m going to set it up with placing entry, stop loss, and profit targets …
- Note the “price action signal” in the following table. Technically speaking, this was a bar with a bearish tail, followed by a pin bar signal, which was also an inner bar within this bar with a bearish tail. The price consolidated for a few days before finally easing off with the existing downtrend.
- The price had dropped to resistance at the 21 EMA (blue line) and the horizontal level of 1.1250, so we had several confluence points: level and trend.
- Traders could have made a 2R profit from this trade if they had held it for 3-4 weeks after it started. That’s why I always preach set and forget about trading!
- This example shows a clear pin-bar sell-signal that has formed during resistance (both horizontal and ema) and within a downtrend. This was a very clear and obvious trade for an accomplished price action dealer. The stop loss was just above the pin bar high and a 2-3R gain could easily be made if you held the trade for a few weeks.
- An interesting “twist” compared to the last trade above can be seen below. Note that the input was made as a 50% retrace of the end of the header.
- This entry either enables a narrower stop loss and thus an increased potential risk / return OR with a stop of normal width you could give the trade more breathing space. In this case we show a closer stop with an increased risk reward, 6R was possible here!
In today’s lesson I showed you how I personally analyze the charts every week and every day and how I gave you an insight into my personal trading habits. Hopefully, after reading today’s lesson (and reading it again), you now have a better understanding of WHY you need a daily trading routine and how to develop one.
The above-mentioned daily trading routine is the core foundation on which all my trades are built, and I believe that all aspiring traders need such a foundation to build their trading careers if they want to have a serious chance of consistently making money in markets.
Many of you know that I publish a daily market comment every day shortly after the daily currency market close. However, what you may not know is that performing these daily comments (similar to the charts above) is also part of my daily chart analysis and trading routine. I actually started writing down my thoughts on the markets every day long before I launched this website, and I’ve been doing this every day of trading continuously for the past ten years. It is literally a habitual part of my daily life. If I miss a comment day for any reason, such as travel or vacation, I literally feel “strange” and like something is “missing”. You also have to get to this point.
My daily commentary and member analysis are an excellent example of how I conduct my ongoing (ongoing) analysis of the market, for ongoing help and support in learning the trade, analyzing the markets, identifying trades and creating your own Get trading plans in real time. You can learn this from me and imitate it in your diagrams. I encourage you to “look over my shoulder” every day while analyzing the charts and planning my trades in the members’ daily chart analysis area and in my newsletter for trading ideas.
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