Follow Your Trading Plan as a Routine Process

Follow Your Trading Plan as a Routine Process

Emotional Preparedness

One of the most difficult obstacles people face when trading real money is their own emotional responses to the ups and downs of their positions which create unnecessary blind spots and losses.  Getting into a routine of emotional preparedness helps keep these emotions from unnecessarily whipsawing you into or out of trades outside of your system’s parameters.  

Start with a clear understanding of all of the parameters of your chosen system and the probability profile that best fits your personality.  Work to prepare yourself emotionally for expected winning and losing streaks and the potential percentage gains (and losses) from them.  Keep these firmly in mind and embrace the structure of your chosen system as you begin getting more serious about putting your money to work. 

Your emotions can easily be upset by a great many things.  If you feel stressed by things that happen to you, consider not taking trades until you can get this stress under control.  Perhaps someone close to you expresses disbelief at your ability to really make this work.  This statement may undermine your confidence and affect your ability to stay the course during a loss or two.  Lots of other things outside of you may affect your mental and emotional state.  Be mindful but not paralyzed by these sorts of stimuli and the negative affect they may have on your body and mind and your trading.  

Your emotional equilibrium may also be upset by things internal to you.  That is, you may have a habit of negative self talk which affects your confidence.  You may tend to react emotionally to losses or big gains which negatively impact your next trades.  It may be hard for you to switch focus from account size or individual position profitability to your annual percentage gains.   

Each of us are different and different things will seek to pull us back into the status quo.  Don’t let them!   Establish a set routine of things you do every day to help you bring your best self to the markets.  The routine might include such things as going to bed and getting up at the same time every day.  It might include an exercise regimen.  It could include multiple self “check-ins” a day to monitor your mood, your self talk, your confidence, or your emotional response to unsupportive comments from others.  It could also include tracking your diet which does affect mood.  

Real success in the markets comes from having an edge as we’ve discussed in previous lessons.  This edge can be things you do every day to avoid big losses from careless mistakes.  A pre-market, during market and post market routine to prepare and monitor your mental and emotional state helps you make better decisions and helps you focus on following your system exactly during your trading day.

There are times and events in your life which cause deep emotion.  You might also feel deep emotion during the daily fight to wrest profits from the markets.  If you find yourself deeply emotional about anything, put off your trades.  Successful people have developed emotional habits to help them approach the markets in a repeatable way.  If they can’t find their emotional balance, they don’t trade. 

Developing the ability to “do what you know you should do” and remaining unemotional or mechanical in the markets takes some practice.  Monitoring your emotional state and working to stay centered and focused on applying your rules regardless of individual position outcomes will give you a repeatable approach to the markets with strategies you trust leading to results you come to expect.  This is confidence in trading.


Follow Your Trading Plan as a Routine Process:  Trading Preparedness

Successful people in all walks of life develop routines to help them achieve their desired results.  Mental and emotional preparedness are important ingredients to your market success.  So too is developing the hard skills necessary to implement your trading and investing system.  If you haven’t already done so, take some time to write down your trading rules.  We keep encouraging you to create a trade plan and establish rules you will follow in your trading because it’s such a foundational part of success. Below are some ideas to get you started:

  • Identify the length of time you should be in a position
  • Identify the time of day and frequency with which you should enter or exit trades
  • List the rules of entry for your system (chart patterns, unusual volume, news, etc)
  • Set up a trading journal and be sure to keep it up to date (and study it regularly)
  • Verify you know how to execute all necessary orders on your platform


We’ve already said that if you fail to plan, you plan to fail.  It’s also true that only if something is measured can it be improved.  Journaling is therefore critical to your market success over time.  Journaling can include things like, Date, Day of Week, Hours of Sleep, Exercise, Mood, Diet, System Trade Rules for entries and exits (and whether you followed them), Type of trade, Support/Resistance, and anything else you feel important to track to help you keep your emotional equilibrium.

The emotions of fear and greed are the biggest obstacles to your success as they will whipsaw you in and out of the markets at the wrong times.  Journaling helps you analyze how much fear or greed might have played a hand in your decisions and therefore helps you learn to better control these emotions over time.

Another important but often overlooked element of establishing a routine is getting comfortable with a broker.  Once you’ve opened a brokerage account, place enough paper trades of various types to get comfortable with the technology of opening and closing positions.  Competence with the tools of trading removes a friction point that might inhibit your success as you continue using real money.  

Finally, be sure to keep your workplace organized and free of distractions.  Keeping your space uncluttered helps you keep your focus where it should be:  on following your system to get repeatable success from the markets over time.


Follow Your Trading Plan as a Routine Process:  Getting Your Mind Right

You may feel like you’re in the middle of a battle during live market hours. The pressure, the noise, and the confusion can become almost overwhelming.  So before you begin your day, take some time to mentally prepare for the fray.  

This includes taking time to review your trading rules.  Reading these rules every day may seem like a small thing of little or no consequence.  But it matters.  Times will come when you have to make decisions quickly and ingraining these rules deep into your psyche will help you follow them because your gut will be trained to follow to react by following the rules.  Just like a pilot spends hundreds of hours in a simulator preparing for an emergency so that they can respond automatically and accurately to solve the issue.

After you have reviewed your trading rules, take some time to visualize your day.  Visualize yourself following the rules for getting into a position and following the rules to get out of the position.  Most people tend to visualize a desired outcome and then continue dreaming into the future.  This is not visualization…this is fantasy.  As you visualize successful outcomes, work backward and mentally create the steps needed to get those results for that trading day.  Then work forward creating those steps in tangible reality.

At the end of every trading day, take some time to review your outcomes.  At this point, it’s tempting to tally your profits and losses for the day and to feel successful if you made money or like a failure if you didn’t.  Don’t fall into this trap.  Remember, outcomes (profits and losses) from any individual trade (or even a few trades in a row) are expected and really don’t matter to your success over time.  Instead analyze whether or not you followed your rules.  Check in to determine whether or not you were able to remain unemotional as you entered and exited positions.  Your confidence should grow as you follow your system and begin to see repeatable success.