Making the most of your time trading
Building on our previous two articles on how much time you need to dedicate to trading, we’ll be going over how you can arrange your trading day, so that you can cover the most opportune moments.
A note on how we’ll go about this – for the purpose of being more useful we’ve chosen a full trading day – one that has eight hours. Your personal one may vary – some people trade full time, but others mix following the market during work or study. The advice we’ll give here will hopefully benefit you in organising the time you have in both of these scenarios.
When talking of a trading schedule we mean arranging your time and activities in relation to trading. These include what we outlined in the article for planning a trade. In it we covered steps such as checking on news that is related to your preferred instrument(s) and picking one or more of a group of instruments that you have some knowledge about or that are in focus that day.
Lets see how this looks like for tomorrow, 05.03.15:
8:00am GMT – UK stock market opens. Impacted instruments: FTSE, occasionally GBP.
12:00pm GMT – Bank Rate announcement from BoE. Impacted instruments: FTSE, GBP, bank stocks.
1:30pm GMT – ECB press conference. Impacted instruments: EUR, USD, DAX, CAC.
1:30pm GMT – Unemployment claims data from U.S. Impacted instruments: USD
2:30pm GMT – U.S. markets open. Impacted instruments: Dow Jones, S&P, USD
4:30pm GMT – UK market closes. Impacted instruments: FTSE
So if you were to trade from 8:00am to say 5-6pm, you’d have six planned news events to look forward to. If you were to trade only after, say 2:00pm GMT, then there would be two expected volatility periods. Obviously they don’t absolutely always offer a lot of action; sometimes events are already priced in and the markets don’t budge at all.
This example has four main instruments for trading (FTSE, GBP, EUR, USD), but if you’d like a bit more background on deciding how many you should trade, you can go to this article. Remember that instrument types and indeed individual currency pairs, commodities, stocks, etc. are like people – you need time to get to really know them (Blog T212 obviously doesn’t believe in love at first sight).
There are several things to watch out for when trading on a schedule with pre-planned instruments and events in mind. A more technical one is that switching between instruments rapidly and frequently can lead to one of the most underestimated mistakes that traders make – mixing up the numbers. It doesn’t happen often, but when it does it can be quite a pain.
If this happens to you there are two ways to go. The first thing is to see if it’s a total mistake and a huge loss seems certain – if so – exit immediately and cut your losses. If you were luckier and this wrongly entered position is on the plus side – ride it out and see where it takes you – but do not enter a new trade – the fact you made an error hasn’t changed and it’s best to sideline yourself before you make another unwanted mistake.
Another important thing, focused on those who trade simultaneously with university and work, is to create some “space” between your main activity and trading. Yes, you can trade on the go, but if your mind is still engaged with something else, especially when it’s emotionally charged, it’s best to give yourself a bit of time and clear your head.
Some might be able to multitask, or quickly move from another activity to trading, but we mustn’t forget the bigger picture – we are, more or less the first generation that has the technical infrastructure to multitask at such a high speed – even if we do have the opportunity to do so, it doesn’t always mean we should. Training yourself and building habits of performing all the steps before trading is crucial in limiting risk and making better decisions.
You can of course expand the schedule to a weekly or even longer one with highlights, but a monthly one would be the longest we’d go for. Just keep in mind the regularity of the most crucial events that affect your preferred instruments and that happen regularly. Knowing what happens next should provide a better platform to be rational and calm when things don’t seem to add up in the market.