of Successful Traders
April 10, 2020
Routines are an important step for many successful people. As trader, you can benefit from establishing a morning routine. Professional athletes, such as golfers, football players and swimmers, often follow a pre-set program that allows them to focus their mental energy on those crucial matters.
- Get Into a Strong Mindset
The way you start each day often sets the tone for the hours that follow. Aim to wake up early -- many successful traders wake up before 6 AM every day -- so you have lots of time to structure your morning the way you want it.
Exercise, meditation and a good breakfast are all cornerstones of a successful morning routine. It also allows you to plan out the rest of your day so other tasks, like errands, don't threaten to intrude in on your trading time. You need laser focus and discipline to be a successful trader.
- Establish Your Goals
Do you want to hedge your stock position with options to protect on the downside in a volatile bear market? Do you want to strategize to generate more income, such as selling covered calls or buying dividend stocks? Do you desire a strategy such as investing in long-term growth stocks for upside potential and buying on a dip? With every trade and strategy, it’s also important to manage your risk and consider your exit strategy.
It might surprise you to learn that few people have clear-cut goals regarding how much they need or want to make. Establishing this figure -- and writing it down -- provides a concrete figure to work toward. Keeping this number focused in your head allows you to benchmark your earnings against it. It’s also important to keep daily records of each trade you make.
- Research the Market
Before the opening bell, take the time to research the market and determine what news happened during the night that might affect your actions. Check out your favorite websites, trading newsletters and blogs, as well as the futures market that provides an indication as to whether the market will open up or down. One trader at eOption sets up her Amazon Alexa app so she can easily hear the top news and business stories while she’s getting ready by stating, “Alexa, play my morning news.”
Of course, trading involves a great deal of focus on the stock market but there are other topics you need to become educated about as well. For example, world events such as how the coronavirus is affecting the global marketplace, or why there’s a flee or flight of the gold markets. Learning about basic economics and how the market reacts to differences within the field is also important.
You may even want to keep a written itemized list of what items you review every morning, as a checklist.
- Study Other Traders
There's a reason why traders are successful and you can learn from them. Learn all you can about their trades, strategies, routines and other important habits.
You likely won't emulate everything you discover about them. Chances are, though, that you'll find more than a few nuggets of wisdom that you can incorporate into your own routine. Newsletters, blogs, podcasts and books are a good way to study the daily habits of other traders. Trading chat rooms are a good way to communicate with other traders and share trading ideas.
- Recap the Day
When you've met your daily trading goal or when the market closes, take a step back and look objectively at how your day progressed. Did you meet your goal? How was the day overall? What went well and what can be improved? What affected your position – news, corporate earnings, dividend announcements, etc.? Was your exit strategy effective?
And importantly, were you able to manage and mitigate your risk? Many traders use options, as well as limit or stop orders, to hedge or manage their risk. Others will set limits on losses – for example, one trader sets a stop loss limit of 7%. If their stock position goes down 7% from the price they purchased it at, they already entered a stop order to sell it- and leave their emotions out of it.
Some successful traders give themselves a grade, or keep a journal of each trade they placed, the profit/loss, and what they can do to improve for next time. This often includes commentary regarding each trade.
- Recap the Week
Over the weekend, it’s a good idea to review your overall trading for the week and plan your strategy for Monday. eOption’s CEO spends many hours reading every Saturday and Sunday to stay on top of news, learn more about events that moved the markets that week, and read his many newsletter trading subscriptions.
According to Business Insider, Warren Buffet spends 80% of his day reading. He recommends that people try to read 500 pages a day. The weekend is also a good time to watch that options trading webinar, listen to a podcast on a new trading strategy or even attend an investment seminar. Many successful traders, even those trading for decades, continue to be lifelong learners of the markets.
We encourage you to try these tips for 30 days, to set up a set morning routine to become a more successful trader – we know you can do it! Taking even a small step today can lead to rewards in the future.
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This information provided for general informational purposes only and should not be considered recommendations or advice by eOption.
Options trading involves risk and is not suitable for all investors. Options trading privileges are subject to eOption review and approval. Please review the Characteristics and Risks of Standardized Options brochure and the Supplement before you begin trading options.
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