The Importance Of A Daily Trading Routine

It can be easy to underestimate just how necessary it is to nail down your daily trading routine, especially if you are a novice. It might seem like a game fuelled by instinct and the thrill of the moment, but most successful forex traders will tell you that a well organised and disciplined approach is crucial if you want to make progress. 


You can read as many books on forex or take as many online courses as you like, and that is important, but it must be matched by a structured daily routine. There’s no benefit to knowing how to drive a car if you don’t follow the rules of the road; in fact you will probably have an expensive crash, and the same applies to trading.


What is the purpose of a trading routine?

The trading routine is a part of your wider trading strategy, which you must have worked out before you even think of going live on the markets. It should include the details of each daily task, set down in a checklist to make sure that you miss nothing out.


Even if you don’t normally make lists and think you have a good memory, writing things down can help you focus your ideas, keep accurate records of your trading methods, and ensure that you don’t miss out on those small details. It can help you maintain your discipline if you are tempted to cut corners, which can lead to big mistakes.


A routine is doubly important if you are prone to getting side-tracked, or work in a place where distractions and interruptions are difficult to avoid. This may be true for many amateur traders, who fit trading into evenings and weekends, when family are around or friends are prone to dropping in.


What should your routine include?


Before you even start to make decisions, it is important to make sure that you are in the right frame of mind. If you are sceptical about this, it is worth noting that many of the people who succeed in high powered positions respect the power of meditation.


Meditation helps you to build resilience, improve your concentration, and reduce your stress levels. It’s a technique used by elite athletes, CEOs, and top celebrities to help them optimise their performance, and is just as important as exercise and eating healthily for mental alertness and clarity.


Meditation can take as little as five minutes, or even an hour; it’s up to you, but even a little can go a long way. There are plenty of in-depth guides and apps which can talk you through the various techniques. Simply by sitting still in a relaxed posture, free from interruptions and focusing on the rise and fall of your breath, is a good place to start.


The real purpose of practicing this is to learn to let go of those busy superficial thoughts that crowd our minds as we go through the day. Once you get used to accessing this state of mind, you can check yourself when you find yourself in a stressful situation, and ground your mind. This helps to prevent you making errors and poor decisions under pressure.


Some people like to use visualisation techniques to prepare themselves for the rigours ahead. Others find that meditation helps them access the left side of the brain, which is where we do our abstract thinking, that can help when analysing charts and patterns.


Review your economic calendar

So you’ve calmed your mind and are raring to go. Start by checking up on your economic calendar for data releases that affect the movement of the forex markets. Look out for the latest unemployment rates, interest rates, inflation rates, commodities, and all the other factors that can influence the currency prices.


If there has been a significant political announcement or geopolitical event, be prepared to deal with some volatility in the markets.


Study the current market conditions

Check up on overnight activity and the previous day’s price charts. Note if the prices are trending in a consistent direction, or if they are moving within a range bound. Use moving averages to help you get a better overall picture. If you are new to forex trading, it can help to read up on how to identify trending markets.


The best trading opportunities can occur in defined and larger trading ranges. Learn how to identify support and resistance levels, as these are key to reading the market. However, beware of the temptation to get too bogged down in details, and spend hours looking at charts. This can cloud your judgement and be counterproductive.


Check your current positions

Review your open positions next. If the information you have gathered from the economic news or from your market analysis is likely to affect their performance, now is the time to carry out any adjustments. For example, you may want to move a stop loss order to mitigate against further losses, or to protect a position which is performing well.


There may be positions you are ready to close or exit from. Remember to always refer to your trading strategy, and do not be tempted to deviate from it, unless there are unforeseen external factors which are causing turbulence in the markets.

Look for potential setups

Looking for new trade setups is essential of course, but don’t be tempted to skip any of the previously outlined steps. This is a mistake that most novice traders make, in their eagerness to get started. Even if you have a solid trading strategy, a disorganised approach will soon take away the benefits.


If your strategy is trend-based, look for favourable conditions, which you should have already defined in your previous work. Once you have a clear opportunity, narrow down the precise time you want to enter the trade. This could be during a support or resistance phase, for example.


You should have a clearly defined decision-making process as to which is your favoured strategy. If the conditions to make a trade are all present, the risk should be managed with a stop-loss order, especially if you are new to trading. Where you place your stop-loss will depend on whether you are making a short trade, or a longer trade over days or weeks.


A stop-loss order automatically triggers an instruction to sell the currency pair once a certain market price has been reached, to protect against the risk of making a significant loss.


Once the stop-loss is triggered, it becomes a market order, which means that the contract is executed at the market price, which may be higher or lower than the currency price. The position of the stop-loss can be moved after it has first been entered, to protect a long-term trade that is performing well, for example.


If you would prefer to have a guaranteed price limit, you could choose to set a stop-limit order, which buys or sells at the market price. However if the conditions are not met and the trade is not executed, then you are unprotected against losses in the event of a sudden sharp downturn.


Review your records

One important step that many amateur forex traders overlook is keeping a trade journal. This is a notebook or spreadsheet where you write down the details of each trade you make. It doesn’t have to be in great detail, but it should at least record which currency pairs you traded, at what time, your reasons for doing so, and if the trade made a profit or loss.


This might seem like an annoying and unnecessary piece of admin, but far from it; it is a tool employed by all effective forex traders. The reason is that it helps to track performance over a period of time. This tells you if your strategies are working, or if you need to have a rethink. It can help you see which forex pairs and time zones work best for you.


After you have been trading for a period of time, review your records to help you spot successful runs, or losing streaks. This doesn’t necessarily mean you need to make dramatic changes, as they can happen to the most experienced of traders. However, it may help you to see where you are going wrong, or indeed, right!


At the end of the day

It is helpful to do some prep to set you up for the following day, such as looking over the economic calendar for any significant events or data releases. It may also be a chance to do some more extensive chart analysis to keep your eye on the bigger picture. Have one final check for any alerts on your trading platform, and then you should wrap up for the day.


It’s important not to lose sight of your work-life balance, as rest and relaxation are important to maintain your psychological resilience. As we have discussed earlier, a crowded mind and a tense body can lead to stress and anxiety, and this will have a negative impact on your trading performance. Get plenty of sleep, and you are ready to roll again.

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FTUK Funded Account Disclaimer

CFTC Rule 4.41 – Hypothetical or Simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, because the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs, in general, are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.

All our funded accounts come with a fixed equity stop out level. Once the account equity level gets below this fixed stop out bar, we will close all running trades and disable trading and access. The stop out level is a fixed value for each funding level, this means that any profit which has been made by the trader increases the loss allowance.

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