Do you have a day trading routine? A day in the life of a day trader – You get to work from home, or anywhere you want, so long as you have a reliable internet connection. You have the freedom to do what you want, with nobody around to tell you otherwise. And not even the sky’s the limit to what you could earn.
Sounds pretty good, right?
But aside from the perks, what’s not often talked about is the discipline, preparation, meticulous planning, and execution that goes into trading.
The most successful day traders are ‘professional’. What we mean by this is that they treat trading as a career, even if it’s just their side hustle. The key is a daily trading routine.
To see long-term success and consistent growth, traders need the focus and diligence to find opportunities and properly manage their trades. A routine helps bring structure so you’re organized and finding the best trade opportunities more effectively and efficiently. This approach distinguishes the amateurs from the actual professionals.
Here’s what a day in the life of a day trader actually looks like and how you can bring consistency to your daily routine.
Pre-Market Trading Routine
The regular trading session for the U.S. stock market opens at 9:30 am ET and closes at 4 pm. But don’t expect to be picking winners if you’re only just sliding out of bed at the sound of the opening bell. While you’ve been sleeping, your competition has been reviewing the market, adjusting their levels, and setting up their plays. To keep up, let alone get ahead of your competitors, you should be doing the same.
Your pre-market trading routine sets the stage for the rest of your day trading. We liken it to getting battle-ready, for when you trade you are at war. War with the markets, market makers, professional traders, retail traders, and even your own emotions. You need to take every advantage you can get to gain an edge.
This means, waking up early – breakfast/coffee/gym/meditation or whatever you need to do to shake off the sleep, release any negative energy and get yourself into the right frame of mind, ready to trade.
Once you’ve gotten into the right headspace, your first task is to get yourself up to speed with a market overview. What is driving the general market? Is there an overall bullish or bearish sentiment? How are sectors performing? Has there been a sector rotation?
Look at the Index Futures (S&P 500, NASDAQ 100) and gather data to analyze how the overnight trading session has impacted trade flow. A bearish Asian market session usually spells uncertainty for European and U.S. trading sessions. More often than not, it’s not a good idea to be trading against the market.
For the most part, we trade using technical analysis. But this doesn’t mean we can simply ignore the news and fundamentals. Economic data, geopolitics, business announcements, earnings reports, pandemics, and mother nature are important catalysts that have a momentous way of moving markets.
You need to be informed of any news that could potentially impact your trades. This doesn’t mean you need to spend hours reading the newspaper. Be efficient. Bookmark your preferred reputable news websites, turn on news channels, and/or subscribe to market newsletters. Scan headlines and keep an eye on any announcements that may move the tape.
Review Existing Positions
Once you’ve caught up with what’s happening in the world, you can start reviewing your existing positions and finding new opportunities.
Take a look at your open positions and make any necessary adjustments. Does any important news impact your trades? Have any of your stop loss or profit-taking levels hit? Do you need to exit or add to an existing trade?
Go through each of your open trades and assess them based on your trading strategy. This is the time to redraw important levels and identify new areas of support and resistance. Review your chart setups and outline your particular goals for the day.
Find New Opportunities
After you’ve managed your open positions, you can start looking for new opportunities.
Most traders will use scanners, while others like to trade the same few stocks over and over. There are benefits to both approaches so it’s just a matter of finding your preference. Scanning and setting up your watchlist is the easy part though. Actually charting and going through the tickers on your watchlist to identify trade opportunities is the part that takes time.
Map out levels of support and resistance, ideal entries and exits, and potential stops and profits levels. Set alarms so you don’t miss price moves and write down your conditions under which you’ll enter a position. An efficient trader plans ahead and automates as much of the decision making as possible. This is so wild swings in stock price during market hours don’t negatively impact your decision making and color your bias. Your job as a trader is not to predict what will happen in the market, but to be prepared for what could happen. Have a plan so you never go into a trade blind.
Also, don’t forget to place notes on your chart. Why is this price level so important? Are you waiting for confirmation or some kind of trigger? Which strike price are you interested in and how big of a position size should you open? Write it down. During the bustle of the market open, the last thing you want to do is forget why you’ve set an alarm, only to then miss a nice rally that you had prepared for.
Market Trading Routine
DING DING DING! The opening bell sounds at 9:30 ET and the fun begins. The first two hours of the trading day are the most active, with the first 20 minutes being especially volatile. This is not the time you want to be playing catch up as you’ll miss prime trading opportunities. However, if you’ve been productive during the pre-market hours all that’s really left to do at market open is to execute the plans you’ve already created with laser focus. Wait for your trade set up, keep an eye on headlines and watch your plans unfold.
Lunch break begins at 11:30 EST. This is the time where volatility and volume decrease dramatically as Wall Street takes their midday break. We don’t particularly like trading during this time as the payoff tends to be minuscule compared to the time and energy expended.
Don’t buy into the myth that the longer you sit at your desk or stare at your charts the better trader you become. Most of the time the opposite is true. Trading can be a high-stress activity. An anxiety-inducing sensory overload that can leave you panicked, frustrated, and questioning every little decision. Should you cut a losing position or hold just a little longer? Another problem during the midday lull is the lack of action. It’s a stark contrast from the morning rush and can lead to traders questioning themselves even further or entering positions simply because they’re bored. Don’t just sit and stare at your charts. Do yourself a favor and step away at lunch hour.
We say this so often and we’re going to keep on saying it – Have a plan and trade your plan. In the lead up to lunch hour, set your alarms, write your notes, and walk away. Let your trading plan do all the heavy lifting. Then all that’s left is trade execution. Plus you get to stay mentally sharp and psychologically uncompromised.
Into Market Close
From 2 pm to market close at 4 pm, the stock market comes back to life. A day trader’s job can mostly be categorized into three separate activities – plan trades, execute trades, and manage trades. Traders that choose to trade the afternoon session are usually juggling all three.
While executing trades and scanning for more opportunities it is also wise to review your open positions. Trading is incredibly competitive and requires traders to constantly review and realign strategies according to the whims of the market. Do you need to move your mental stops or set new profit taking limits? Stay focussed and if you do find yourself straying away from your trading plan, then walk away and call it for the day.
After Hours Trading Routine
Review, Review, Review
Your most important learning experience as a trader is having an honest review of your past performance. This reveals your mistakes (we all make them!) and gives you the opportunity to work through and adjust your trading plan if you need to. Now you don’t need to do an in depth review of your trades every day. But at the very least you should be logging all your trades in a trade journal, ready for a review at the end of the week.
Don’t limit yourself to reviewing just your trades either. Look back at your past performance and have a think about your frame of mind. Is a losing streak affecting your confidence? Is a winning streak affecting your bias? Study your behavioral patterns to reveal any bad habits that could be improved.
We can’t stress the importance of having a set of trading rules, writing down your rules and trading by your rules enough. They could be anything from just observing the markets in the first 20 mins of the day, being more aggressive about taking profits, setting tighter stop loss levels or adjusting your risk and reward. Whatever works for you.
After the market has closed and you’ve taken a screenshot or journaled your trades, step away from the computer. Do something else. Anything else that makes you happy. Downtime is important. Time off from trading is important. Relax and de-stress, so you’re mentally charged to do it all again the next day.
Weekend Trading Routine
The weekend is prime time to review the past week and prepare for the week ahead without the added stress of moving markets. Set aside a few hours to update your charts, redraw your levels, set price alerts, and update your watchlist.
Our analysts release the Echelon 1 Weekend Report every Sunday. It is an invaluable resource of helpful insight and analysis of the overall market and stocks of particular interest. Read it! Study it! And get a jump start your trade preparation for the following week.
In summary – to be a professional day trader, you need to act like one. This means having discipline. Set yourself a day trading routine and consistently adhere to it every day you choose to trade. Not just sometimes. ‘Sometimes’ does not equal discipline. You may get lucky here and there, but in the long run, the market doesn’t reward you to be disciplined ‘sometimes’. Long term trading success takes consistent and serious effort. This is the reality of a successful day trader.
Now we hope we’ve inspired you to set yourself a daily trading routine. It doesn’t have to fit ours exactly either. The point is to find a routine that fits you, your personality and your trading style. If you don’t enjoy your routine, no amount of discipline or dedication is going to make it stick. Your routine needs to work for you. It should bring structure and zen to your trading and make you a more efficient trader overall.
Day trading has the potential to unlock your financial freedom and independence. It’s worth the extra time dedicated to preparing and planning. Try out a day trading routine and see how your trading performance improves.
How Echelon 1 can help.
If you’re new to trading and want to learn how to navigate the stock, options, futures, and crypto markets with confidence, come join the Echelon 1 community. Be part of a thriving network of traders, analysts, and investors. Learn the fundamentals, receive mentorship from seasoned professionals, and have access to real-time analysis and member-only plays, so you can capitalize on the biggest moves in the market.
Welcome to the Echelon 1 community and take the guesswork out of your trading.