The Traders Journal

Investing Routines: A Pillar of Any Successful Program

Images-1Ever drive a bumper car at an amusement park? Remember how the bumper car headed off in one direction until it bumped into what it deemed an immovable object and then backed off in a seemingly random direction. I’ve met investors whose methodology resembles something similar. 

Every experienced investor develops a personal trading routine – whether or not they acknowledge it or write it down. The secret of successful investors, however, is that they weave together a string of powerful habits and routines, eventually constructing the equivalent of a durable investment cable. Their routines become a roadmap of checklists executed each day, week and month.  Just as every winning sports franchise pre-thinks and practices different scenarios as an essential caveat to their game plan, so must investors pre-think their routines and practice them regularly. Successful investors understand this.


 
I’ll confess it:  I’m a “checklist junkie”. I have routines for pre-market hours, market hours and after-market hours. I also allocate a portion of each day to weekly, monthly and annual tasks. This is all centered on my objective of needing to know exactly what is happening in the markets. 

Let me share with you seven personal reasons why I’m so obsessed with my checklists:

 

  • I breakdown all my investment observations and decisions into written checklists so I can focus only on my basket of essentials – those that have proven their worth over the years.  I jettison the superfluous and thereby optimize my most precious commodity: time.
  • Written checklists of my routines reinforce good habits and provide a framework from which to purge bad habits. The key lubricant in this magic paradigm is discipline. Discipline to follow checklists. Discipline to make adjustments to checklists.  Discipline to embrace, believe and execute based on these checklists.
  • With my checklists in hand, I know what to do next and how much more I have to do. And most importantly, I know when the job is done.
  • Distractions are inevitable. By subscribing to a specific roadmap, I can quickly return to my routines with little loss of efficiency. Similarly, after a summer absence, I can get up to speed by stepping back into familiar routines.
  • A corollary to the preceding reason is that often in the heat of the moment – when the market is moving fast and I have multiple trades in play – my checklists aid in keeping me focused and they remind me of exactly what I must do to make money.
  • Over the years, I have found that stress has a negative correlation to profits. By remaining tethered to the “womb of my routines” and the resulting familiarity and comfort it offers, I keep my balance and minimize my stress.
  • Finally, I know for a fact that repetition and consistency allows one to achieve mastery. This is a truism in both sports and investing. What value is success if one does not understand how to replicate it. My routines increase the probabilities that I will replicate my wins and minimize my losses.

My objective here is simply to convince you that the energy and effort of assembling your checklists and determining your routines will prove to be a positive high leverage activity. You’ll discover that following your trading plan with discipline each day will be much easier than trying to think of what to do next.

In closing, a few rules:

  • Write down your routines.
  • Keep them up front on your desk or bulletin board. Out of sight is unfortunately out of mind.
  • Focus on the energy, mental preparation and discipline it takes to execute your routines.
  • Give them a chance to work. Don’t be tweaking them weekly.

I can guarantee you will profit from formulating a well thought-out series of routines and checklists – ones that include and acknowledge your emotional self, your physical self, your family realities and your personal investment style. Step by step, you will become a more successful investor.

Trade well; trade with discipline!
-- Gatis Roze
 

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Very helpful! And thanks for your comments during the recent day-long seminar in the Seattle area!
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