I’ve known a lot of great traders. Yes, they are out there. Some eventually became money managers, and then their careers evolved into more client hand-holding and less real trading. Clients can kill an exceptional trader. That’s the qualifier. A day in my life is a day with no clients. Contra mundum. I have a need to exercise my own ideas without the baggage of others.
The best traders make it look easy. It’s not. Great trading is the result of years of consistent effort, disciplined routines and cultivating an intuition for the markets. You learn to manage what is in your control, accept the uncertainty built into every investment, acknowledge that you can never totally defeat uncertainty and then quickly put behind you the inevitable bad decisions.
Having said that, I’ll share with you how a typical market day begins for me. Understand that I live in Seattle, and my time references relate to that orientation. The other pertinent fact here is that I have 2 offices – each a mirror image of the other. One is in my home; the other is downtown. I am a morning person and operate at my best by getting up early. As I’ve written many times before, to be a profitable trader, you must “know thy self.” The markets open at 6:30 AM west coast time and that suits me fine.
I operate comfortably from my home for the first 3 hours of the day. I have wired my master bathroom with speakers and a television, so the day’s news starts to flow as soon as I stumble into the shower. With coffee in hand, I then venture into my home office and boot up the screens before the market opens to check activity on the NASDAQ pre-market pages, as well as checking on overseas markets. Since I’ve spent a good deal of effort organizing and populating my ChartLists on StockCharts.com, my morning routines allow me to quickly check on the markets and all my positions. That done, I can then focus on index and sector analysis, as well as breadth and sentiment. As the market opens, I’m very interested in and am looking closely at the psychology of the market for that day, tracking volumes, price action, VIX and VXX.
Wall Street offers up a number of clichés concerning the opening hour, but suffice it to say, most converge on the belief that the retail market (i.e. individual investors) drive the opening as they execute their trades before they hustle off to work. Politely paraphrased, it’s the “weak hands” either buying or selling to the “strong hands” (i.e. institutions). For this reason, I’m seldom active as a participant in that first hour.
My early morning modus operandi is more that of reviewing my charts and adjusting alerts (not stops) which are set with one of the four brokerage houses I use. Because I watch the market closely during trading hours, I tend to use soft stops as opposed to hard stops that are entered in the market with your broker. With soft stops, if my price is hit on light manipulated volume, I will often sit tight. By 8:30 AM (11:30 in New York), I’ve already been up for 3 hours and read both Investors Business Daily and the Wall Street Journal. I have a firm handle on the market’s psychology and I’m packing up for the 20 minute commute to my downtown office where I’ll focus more on finding the low door on the castle wall!
This blog takes a different tack from my previous ones. If there’s any interest out there in the readership universe for the balance of my day, I’d be grateful to hear from you.
Trade well; trade with discipline!
-- Gatis Roze
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