Contrary to popular belief... successful day trading should actually be pretty boring and, other than the stocks being traded, should be the same process every day. Having a routine everyday based around your trading allows you to put your focus on the trading itself, rather than things like what time you'll wake up and when you'll eat breakfast and lunch.
Being that I am a full-time day trader focussed mainly on trading the largest movers at the market's open, it's important for me to be wide awake and ready for action when the market does open. This is true for most traders, since the open is when everyone takes advantage of the market's increased volume and volatility, which will generally decrease throughout the day. However, if you happen to be someone that focusses more on midday or afternoon trading, your trading routine will likely be different from mine.
With that being said, here is part of my personal trading routine that I believe plays a big part in my trading success.
2 Hours Before Open (7:30am EST) - Rise and shine!!! This is when I wake to start preparing for trading for the day. I usually force myself to avoid looking at anything market related until after I do typical morning things like each breakfast, go to the bathroom, etc. The reason for this is because I don't want to wake up and stupidly jump into a stock during pre-market because of FOMO (Fear Of Missing Out) while I'm still 50% asleep.
1.5 Hours Before Open (8:00am EST) - This is when I start to shift my focus to the stock market for the morning. It's pretty common for companies to release important news like earnings reports, trial results, FDA approvals, etc. at this time. Because of that, I take this time to start scanning the market for some of the largest pre-market movers and will then look into their recent news, SEC filings and will even start doing some basic technical analysis on them!
Since I'm already doing the research, I figured I might as well share some of it to help out some other traders so this is also the time when I start putting together my morning watchlist. I update this list daily with the largest morning movers, along with their news headlines, support levels, resistance levels, outstanding shares, and previous day movers!
Now, I don't personally trade during pre-market (usually) so even though I'm doing all my research and analysis in pre-market, I'm only preparing myself for when the market opens. By having done all my technical and fundamental analysis, I now usually know exactly which stocks I'll be trading at the open, and I'll even know which ones are most likely to gap up and continue running at open, along with which ones will come straight back down after their gap up.
The Open (9:30am EST) - At this point in the morning routine I'm completely ready for whatever the market throws at me. I usually trade during the first 2 hours of the market being open. Since I'm a very short-term trader (probably considered a "scalper" to most), I usually trade multiple times within these first few hours.
For obvious reasons I can't go into all of the specifics of my trading strategies here in this post, but they are taught step-by-step here! During this time, one thing I always recommend traders to do is record their screens. Even if you aren't trading during this time, it's very valuable to be able to re-watch the market later on, and even slow it down and watch it in slow motion. This will help you be able to spot things that you may have missed in realtime. You can use free screen recording software like Quicktime or OBS to do this.
The Close (4pm EST) - In all honesty, this part doesn't always happen exactly at the close. A lot of times I'll be at the gym or off doing something so I may end up doing this part of the routine later in the evening. With that being said, at this time I gather and track data to help improve my strategies and see how my strategies are performing under the current market conditions.
To do this I use Numbers on my Mac, but if you don't have a Mac you can use something like Microsoft Excel. Software aside, you probably will want to track different data from me also, unless you're trading the exact same way. The data should be adjusted to your trading strategy and preferences. For me, one of the strategies I trade most often is my morning gap strategy. This strategy involves looking for stocks that are gapping up, but fail to continue their momentum at the market's open, making them great opportunities to short-sell and profit from them coming back down.
Some very valuable information I like to track for this specific strategy is show in the screenshot below. The date, stock symbol, gap up %, open price, shares outstanding, volume at the market open, difference between the open and high of day, difference between the open and close, whether or not it hit the high before the low, and whether or not it closed lower than it open for the day.
This is an example of just a few days of data, but after you have hundreds of stocks tracked, you can start to see how these stocks will trade on average. For example, if you know that on average they will spike 10% above the open price before reversing to the downside, you can use that information to get a baseline for where you may want to start looking to short-sell. For columns like the ones on the far right asking whether or not it closed below its open, I like to use 1 for yes and 0 for no. This way you can select all of them and your software (Numbers or Excel) will tell you the average. If, for example it was 0.80, you know that 80% of the time stocks like the ones that you are tracking will close lower than they opened for the day.
Tracking data is one step of a trading routine that many people overlook, but it my opinion this is easily one of the most important aspects of a successful trading routine.
After this, my trading routine is done for the day and I'll be ready the next morning to restart and do it all over again! Whether your trading is very similar to mine, or even the completely different, I hope this was able to help you create your own trading routine to prepare yourself for a successful day of trading!
Ready to learn more & Master the Market? Click below!