Day trading combines technical analysis together with mastery of emotions to spot opportunities in the daily stock market. For this reason, there are certain actions that the trader needs to repeat every day, which is why we encourage traders to develop a trading routine.
Developing a routine is important because it trains your discipline. If you cultivate a habit of sticking to a daily routine, you are likely to carry this mentality into your trading, allowing you to follow your rules and plan more easily. Developing a routine also helps to efficiently plan the time you spend on every event of the day. In this chapter, we lay out what a good daily trading routine and strategy looks like, and show you how you can be similarly successful in your trading activities. Of course, you need not follow this routine to a tee; it is an example to show you how you can maximize your time in an orderly manner.
Typical Daily Schedule
8am – 8:30am: Turn on desktop set up. This is also the time to check if there is any overnight financial news a trader should know about. A trader should also check on his overnight stock positions (if any) at this time, just to see how they are doing.
8:30am – 9am: An hour before the open, he will review his watchlist and trade plans from the night before and make any necessary changes to the list according to the pre-market action.
9am – 9:15am: After the watchlist is complete, he check the list of stocks to see if there are any pending news due for release in the day. A day trader does not want to hold a stock into any news unless he has a very strong understanding of the fundamentals of the stock. He also checks if the stocks are available for borrow from brokers. This is important. He doesn’t want to watch a stock all day until the perfect time to short it only to realise that he cannot do it because it’s not available to borrow at the broker.
9:15am – 9:30am: He might narrow down the watchlist to 3-5 stocks which he wants to trade once the market opens. He can select these stocks based on how their chart is setting up.
9:30am – 11:30am: Once the market opens, he will actively trade the stocks on the watchlist because the market is most volatile in the morning. This also represents the biggest opportunity for gains.
11:30am-12:30pm: If a trader is not holding onto any positions, this will be the break hour.
12:30pm – 2:30pm: This period is usually the lull and not much action goes on. Of course, he might choose to observe the market in case a good set up appears.
2:30pm – 4pm: The market close usually brings about another wave of volatility because people are anticipating the stock to gap up or gap down the next day. Many day traders are also rushing to close their positions. A trader will trade this 1.5hours like how he did during the market open.
4pm – 5pm: If you are a new trader, you typically do not trade in after hours. Instead, spend this time just watching the market and writing down reviews for your trades of the day.
10:30pm – 11:30pm: Make it a habit of spending an hour every day to create your watchlist and plans for the next trading day and review your past trades.
12am: Lights out.
A lot of what a trader does is habit that has been developed over a long period of time, and we encourage you to do the same. It is very beneficial to write the list of things you need to accomplish throughout the day and plan them in your head accordingly. It is also evident that pre-market planning and post-market reviewing is pivotal to the success of day trading. Insuring that you have all your plans devised before rather than during will allow you stay focused and not lose track of your daily goals.