Trading Lessons I Learned the Hard Way, Part 13

08/17/2012 8:00 am EST

Focus: STRATEGIES

Ron Wagner

Principal Partner, RevolutionaryTrading.com

Ron Wagner of Revolutionary Trading discusses the lessons he learned from his early days of trading, and how his trading has evolved to become profitable.

Find the previous article here. Start at the beginning here.

Now that I had started to build some confidence in what I was doing, things were still somewhat confusing and erratic. I realized, like anything else I had done in my past successful endeavors, I had to now create a consistent routine.

I happen to love routine and this is one area that was easy for me to conquer and embrace. I just had to apply some of my past experiences to my trading program.

I now knew which patterns to use for my personal choice of trading style, when I could be more aggressive (more on this subject next time), how to recognize sector rotation, and many other elements to focus on. But I was still a little behind the curve on some days, and for this I had to create a reliable daily routine.

I always loved working on my trading page and analysis pages. It was fun, and I always found something that could help me improve my results. About 12 years ago, I found that I was becoming so consistent in my results that there wasn’t much need for adjusting what I did anymore.

As you know from the earlier parts of this journey, I traded all day, every day, doing 20, 30 or more round trips per day, not including multiple entries and exits. I felt there must be an easier way, and I found it for myself by creating an outstanding daily routine and tracking my results so I could figure it all out. (More about tracking results in a future part of my journey.)

The one singular thing that changed how I improved my performance—and cut down the amount of time I traded—was the way in which I constructed my trading page. Way back at the start of my trading, I traded using a single 21” CRT monitor. I then upgraded to two 21” monitors and I thought I had found a piece of heaven on earth.

When I finally went to four 19” monitors (now three 24” flat panels) my trading life changed. A logical observation might be that if finding more monitor space changed how I traded, and improved my efficiency, why not just go with six or eight monitors?

The answer for me was that I could only process a finite amount of information. Too little information was hurting my progress and too much made things far worse. Now that my trading eyes are getting older, I do think about increasing my number of monitors...but only to make everything bigger!

I kept working and working on my trading page until I had just what I needed to trade really well and have not altered it over the years. Why would I tamper with something that was productive for me? I encourage anyone to take the time to find a systematic way to work through the trading day in an organized way and using the best configured trading page for you.

Everyone is different, and I never liked to share my “perfect page” (for me) with others because when I did, I ended up getting so many technical questions about resolutions, how to replicate it using other trading platforms and/or using a different number of monitors.

Now, I do share my page with some of the students that I personally mentor and coach, as I figure, why should they have to start from zero? At least I can provide them with a starting point that has served me well for so many years.

|pagebreak|

Well, it would take me a short novel to explain all of the things I have done over the years to create my organizational structure, but needless to say, I now have a plan that I follow religiously every day. Except when I’m teaching others what I do, I follow the same routine at the same time. In short form:

  • 4 p.m. to 5 p.m. ET—I scan my universe, print out my trades, and update my journals. I set my trading page with my top selections in graphical form and in minders. I place my backup selections in minders only. I’m ready to trade the following day once I check how my selections are acting based on the market open.
  • 9 a.m. ET—I scan the major headlines for the day. I do not leave any media flowing to distract me during my trading time. I check to see where the market is and make sure to be aware of any economic reports coming out shortly after the market opens.
  • 9:15 a.m. ET—I supplement my watch list with a few carefully chosen stocks that may be gapping up or down and put them on my trading page in chart form and in minders with possibly some backups. I’m ready to trade!
  • 9:30 a.m. ET—I have a plan for the first ten minutes once the market opens, but I don’t take as many quick trades as I once did. I have a plan for after the first ten minutes and take two or three carefully chosen trades and am usually done for the day within the first 60 to 90 minutes.

I live in Colorado with my lovely wife (kids grown and gone now), and there is nothing better than to make a reasonable amount of money and be done by 9 a.m. our time. We do manage our swing or longer holding positions when the market is suitable for that type of trading, but that is very simple to do, and we can use our trading software to also help manage positions in some cases.

It’s really a personal decision as to how long one wants to trade, but this marvelous opportunity called “trading” is a magnificent way to provide income and lifestyle.

I think most that come to trading think they have to sit in front of their computer all day, and that is just not true if you have a well thought out organized plan and daily routine. The key will be to establish that part of your plan and then stick with it. It really can become much easier once you get the hang of all the elements.

When I wake each morning, I have great confidence in my personal trading program, and I have not changed what I do for many many years. Why would I change something that has proven to be very productive?

Lessons learned:

  • Create a trading page and analysis pages that will become your control panel. Get this right and you will be able to build more confidence in your trading!
  • Have a plan for each time period you choose to trade in. Trading the first 30 minutes after the market opens requires a different skill set than trading the balance of the day. The first 90 minutes of the trading day is remarkably different than trading the last couple of hours.
  • Make sure to establish a routine that you follow each and every day without deviation.
  • Once you find your personal choice of organizational schemes, trading becomes easier as many of the decisions will have been made in advance, and then it’s just a matter of letting the market show you the direction for the day or hours you trade.
  • If you are trading for income, the shorter time you are in the market the less risk you expose yourself to. That should be part of your plan and daily routine.

Next, I will talk about trade management and a huge factor that made a big difference in my results.

Ron Wagner can be found at Revolutionary Trading.

Related Articles on STRATEGIES