Trading the Forex Market- My Daily Routine
I have been trading the forex market for just over 2 years now and I have learned a lot over these past 2 years, I am still learning every single day improving my skills to becoming the best Trader I can possibly be, an Elite Trader. Today I will be discussing how I approach the markets daily and what traits and skills I have learned that make a successful and consistent trader to help one extract money out of the market day in and day out over the long term.
In this post I’m going to discuss my strategies, my procedures, risk management, money management, trading psychology, confidence, patience, persistence and discipline. Let me start off by saying that trading is really the best job in the world for me, I really love it, it challenges me and helps me reach for the stars. I love the mind game; the mental aspect of trading is not for the feint hearted. I need to always be sharp, operating at full capacity and performing at an elite level. This feeling is the best feeling ever because it allows me to be my best self and that in turn results in me living my best life.
When I first started trading it was because of the sheer size of the market, $5.3 Trillion dollars circulating every single day! Ha-ha they had me at 5 Tri, Tri, TRILLION! So, in a market that big how can you not make money right? Ha-ha it makes no sense not, especially if someone is willing to learn how to extract money from the markets day by day, week by week, month by month and year by year consistently. The forex market truly is an amazing market and today I’m going to share a bit about this market and how professional forex/currency traders make money in the forex market.
I have developed rules for the market which I follow by law every single day and work on them on a continuous bases, these rules and lessons have taken me many hours of studying and practice to develop and understand, I hope that whoever is reading this post will learn something. I have learnt that when I play by the rules it creates an environment which minimizes uncertainty and risk when I’m doing business in the market. I take my trading very seriously which is why I trade full time, I trade like a business and the goal of the business is survive in the market that its operating, the 2nd goal is to make as much money as possible while managing risk and not taking any large losses and potentially going out of business. As my mentor Wayne McDonell always says, “Live to see another day”, I keep this in mind every single day even if it means I don’t take a trade that day or that week.
If I am alive then I can thrive, but if I’m dead however then well… I’m dead. This is how I think about my trading capital, my mission here is to keep my trading account very much alive and I do this by practicing professional risk and money management which means that I do not risk more than 1% of my trading capital on any one trade, NO MATTER WHAT! I am not a forex god and I don’t know the future any more than the next trader or investor, in fact nobody in this world knows the future, it’s good to keep that in mind when trading. Price can move in any direction it wants, I am not in control of the market, I just want to be a “cork in the river of forex”- Wayne McDonell and want to be in the direction/path of least resistance which is why most professional and successful traders always say the trend is your friend. As I have mentioned before, I trade like a business which means its not personal and I treat it like a business because that’s what it is to me. I’m a professional currency trader and my job is to extract money consistently out of the markets using high probability trading setups, practicing consistent professional trading behavior.
One of the nice things about trading as a business is that I can pay myself whatever amount I want based on my trading targets and goals over the long term. One thing about trading that I have realized is I need to always have a longer-term view; forex trading is a business just like any other business and needs to be treated as such. Starting small and growing the business consistently is the key to success, trading is not a get rich quick scheme, so I never gamble in the market. What I mean by this is that I never risk more than 1% on anyone trade, the 1% rule is key to success for me as a professional trader, as much as we all love to make money, we also love to stay alive.
In this section I will be taking some time to explain what it is that I do daily, weekly basis, monthly basis, quarterly basis and yearly basis. One thing that I need to do as a trader is to always stay sharp, always be in tip top shape mentally, physically, emotionally and spiritually. I like to always keep my cup full, so I reflect and evaluate all the time, every day, every week, every month and every year. This is a never-ending cycle because we grow and learn every day, reflecting helps me see what I’m doing and what I have done, from there on I evaluate, adjust, refine and improve. THERE IS ALWAYS ROOM FOR IMPROVEMENT!
Day to day activities as a currency trader, so every day I wake up at 6am and get my day started but this is different for every trader. Let me get into the meat of what it is that we really do as professional traders, I have what I call my daily mandate which is my plan for the day. This daily mandate involves me doing all the necessary checks and plans in my trading business. As a trader my number one job is to manage risk so that I can operate with a clear state of mind and able to act and engage the markets effectively and efficiently with no emotion, there is a lot of uncertainty when it comes to the financial markets and we will never ever be 100% sure of what is going to happen, I want to be protected if things don’t go according to plan. The first thing that I check is economic data that has come out on that day or data that is due to come out that day or that week. While looking at this data I synthesize and try interpreting the information whether its GDP, CPI, Interest rates, balance of payments, central Bank statements, minutes, reports etc. I ask myself questions like What? Why? Who? How? Where? When? These are questions that I ask all the time, they help me put the pieces of the puzzle together and stick to the high ground. In this business we want to stick to the highest probability which will allow us to make money consistently over the long term. The trend is my friend, analyzing important information helps me see the bigger picture. Another reason why I want to know about news events and economic data is because these can produce volatility in the market and this can be risky for my positions or trades that I have open in the market or if I plan on entering trades that day or that week, I cannot emphasize enough how important risk management is in this business.
The 2nd thing in my daily mandate is looking at my open positions if I have any open. It is my job to manage my trades/positions. Now let me explain what I mean by manage trades/positions, this is the challenging part of trading, when the real fun starts because I have the power to close a trade/trades with a profit or a loss depending on what the market is doing and how my trades are affected. One of the challenging part is that as a trader I am 100% in control of my actions in the market and I am fully accountable for my actions, there is no wrong or right, it’s all discretionary and I just need to play by the rules, my rules that is, the rules that I have developed and trust that they work on a long term basis. While managing positions I’ll look at what the market is doing, what the pair that I’m trading is doing, I’ll look to see what happened in the previous trading session and think about what the possibilities of the next session could be. I also manage my positions by looking at whether things are going according to plan or not and decide whether I should adjust my stop loss accordingly allowing me to reduce risk or just let things be and let the market do its thing. If price is moving in my favour and the market agrees with me then I will look to add to my positions while managing risk so that my initial risk stays the same but my potential return increases, I only add to winners. As I have mentioned earlier, I don’t know the future and I want to stick to the highest probability outcome and highest probability setups. These are setups that happen all the time and have a high probability of working and making money consistently in the long term. Staying small and staying humble is very important in the market because no matter how much money I have or the amount that I’m trading I can not inflict my will on the market so I’m patient, persistent and disciplined always keeping my ego in check.
When it comes to managing positions, I need to always remember the main objective of my business and my trading activities which is maximize wealth and make money consistently over the long term, taking money out of the markets is what I’m there to do, that’s what all traders want out of the markets. Well at least professional traders do, we want to make small modest consistent gains every week, every and every year what happens on any one day doesn’t really matter, it is insignificant in the grand scheme of things. Whether I take a win or loss on any given day, I don’t really care because it’s nothing personal. Its just another day at the office but every single trade must follow my rules and I take trades one at a time with each one getting my full analysis and full attention. For me trading is a daily activity with an end goal and target in mind for the long term, I just take it one day at a time. A wise man once said “ordinary things done everyday consistently leads to extra ordinary results” this saying is very true, and I carry it with me everyday in the financial markets. I want to take money out of the markets little by little because I know it’ll add up over the long term.
The next thing that I do in my daily mandate is I analyze the market and create trade plans or review already existing trade plans. Most of my trading involves thinking and planning (chess moves), when the opportunity presents itself I’m ready to attack. Most of my trades I will enter using working orders because I don’t need to be at my charts staring at price when price gets to the levels that I wanted to get in at, working orders also eliminate a lot of decision making when it comes to pulling the trigger. In the heat of the moment it can get a little intense and you find yourself asking questions like should I? shouldn’t I? working orders are good for my trading style because they help automate and simplify my trading, I don’t have to be staring at price when it’s show time and I don’t have to be staring at price all day long.
Trade planning is the next thing that I am going to talk about, the point of trade planning is to lay it all out before it happens so that if it happens we are well equipped for the journey. I want to always be prepared and be in the right state of mind when the opportunity comes because when that opportunity comes, and I didn’t properly plan or prepare for it then it’s a wasted opportunity and I am not about wasting opportunities. When I trade plan, I am looking to trade in the direction of the trend which is also the path of least resistance. I want to buy at support/ demand levels in an uptrend with my stop losses far from traffic, behind previous market structure lows. I want to sell at resistance/supply levels in a downtrend and have my stop losses far from traffic, behind previous market structure highs. The key to technical analysis and trade planning is to be completely objective. I have no opinion when it comes to technical analysis, support is support and resistance is resistance. The old saying is that the numbers don’t lie, I want to always buy at support and always want to sell at resistance where I know other market participants could potentially enter in the anticipated directions. Technical analysis is a self-fulfilling prophecy, it needs to be very easy and obvious to see, technical analysis needs other market participants for it to work and that’s why I remain completely objective, this allows me to be on the high ground. Successful trading requires me to always take the high ground. My technical trade plans will always factor in my longer-term views of fundamental analysis which includes my bias on a certain financial instrument or foreign exchange currency pair that I want to trade, I will stay objective in the markets with a bias and some discretion. By discretion I mean the freedom to decide what should be done in a situation (close the trade, move my stop or leave it open if I am in an open trade). This game or this business is all about independent thinking, no one can do it for me. I call the shots- the goal is to maximize wealth consistently over time day by day, week by week, month by month and year by year.
Once I have done my daily mandate and I have made my plans, I am ready to make my next move so all I can do is wait. Being patient is a key trait to be a successful trader so I wait for the right opportunity which is when the price gets to the levels that I have identified and planned for beforehand, these levels are my levels of interest whether its support in an uptrend or resistance in a downtrend. This is another challenge about trading, waiting for price to get to my levels but I have improved and continuously improve on my patience in the markets, staying focused on what I really want to do helps carry out the patience whether I am waiting to pull the trigger or waiting for open positions to fulfill their destiny (reaching their targets). The best part is that while I’m waiting I can pretty much do whatever I want whether its work on projects, spend time with family and friends, study, it can be whatever I want, and my money gets to work for me, the trades and investments run while I live my best life. Confidence, Patience, Persistence and Discipline are key traits to professional, consistent and successful trading, this is what I believe it takes to be an Elite trader. I love trading because it teaches me so much about myself. Full capacity, elite performance in everything I do, doing only what works in the markets… rinse and repeat.
Now that I have explained what I do during my daily mandate which is very important because it allows me to act with intent and a purpose. I have a plan, and this is great because it gives me an upper hand when the opportunity presents itself, I’m ready! I don’t think there should be too many surprises in trading, everything should be predefined if plan to act, taking the high ground and sticking to the plan which means I’m not reacting to the market. I am in full control of what I do in the markets, no one else. With great power comes great responsibility, with full control comes risk management and money management which is what I am going to discuss next in this post.
Risk management and Money Management.
As a professional trader I must know this and practice it by law and religiously. Without these 2 components my trading business is not a business. In this business I am a risk manager, the general concept is that I need to make more than I lose. I want to make small and modest to large gains consistently and I am only allowed to have very small losses. This logic will result in a positive equity curve and wealth maximization. The risk that I can take on any one trade is never more than 1%, no matter what timeframe it is, no matter what day it is, no matter how big the account size is, no matter how I feel and no matter the weather… NO MATTER WHAT! This is a very conservative approach but it’s necessary for survival and I am perfectly okay with this style of trading because when the market agrees with me I can add to my positions and increase my position size in the market. I only add to winners always manage risk with predefined exits incase things don’t go according to plan.
I also have a drawdown limit and an exposure limit when I’m trading the markets, these limits are my absolute threshold. When I have hit my drawdown, it is time to walk away. My drawdown limit on any given month is 5%, If I lose 5% of my account on any given month I will stop trading and fall back. I need to STOP- step back, investigate, assess and then proceed. My second limit is my exposure to the market at any given time. I can have 100 positions or as many as possible, but my exposure must never exceed 5% of my trading capital at 1 time, this means that I only add to winners which will keep my trading margin healthy. How I can do this is by moving my stops as price goes in my favour and adding positions 1 trade at a time, it requires patience and discipline but that’s part of being a professional trader. Being patient and disciplined is key in this business no matter what strategy or what plan a trader is trying to implement. The 2nd thing is money management, I do not take trades that have a risk to reward of less than 1:1.5, meaning I want to make at the very least one and a half of what I am risking for a trade setup to be viable for me. It makes no sense to me to be taking trades with a poor risk to reward because it will be difficult to make money in the long run based on my experience trading and studying the markets. My trades need to make more than they lose then the account will grow and maintain a positive equity curve. When it comes to exits and taking profit there is no right or wrong, I am a discretionary trader, but I stick to my rules and this helps with exits whether its exiting with a profit or a loss. Professional traders make money, we all have different trading styles and different monetary goals and targets but we’re all playing the same game. I pick a side, bull or a bear and I do my job day in and day out achieving my trading goals and targets gradually with compound interest taking care of the rest. Making money in the market is not that difficult, taking money off the table when the market gives me money day in and day out. Small gains add up after 100 trades, 1000 trades, 10000 trades etc., trade number 1 and trade number 1002 must follow the same set of rules, that’s what it means to be consistent. If I stay consistent my results will be consistent but if I am inconsistent however then my results will be inconsistent. The key here is to be confident, patient, persistent and disciplined- The mastery of oneself, mastery of myself, I am in the markets to make money, so I take money out of the market when its there. As a professional trader every single trade I take goes through a thought process and planning, I don’t just click buttons all day long with no real thought. I plan, plan, plan and then execute! When my trades do what I thought they were going to do in the first place I stick to the plan and carry out the patience and discipline, taking the money when its time to take the money and coming back tomorrow to do it over and over and over again with SMART goals in mind (specific, measurable, attainable, realistic and timely goals).
The next thing that I am going to touch on is trading psychology and emotions, the answers to all this are inside me. This is the mastery of myself, I must always be aligned on a conscious and subconscious level to produce gains and my subconscious must believe that I deserve those gains for me to keep them. Trading is a very interesting business, game, sport, everybody has their own analogy or metaphor. It’s interesting because it allows me to really get to know myself which is key because I am the only one that I can rely on in the markets, I am the only one who really knows what I want and what’s best for me. My mentor Wayne McDonell always says, “what would I do if I were me?” and I finally understand what he means by this because when one is in the markets they must be thinking independently, that’s what it means to be a professional trader and if I can’t think independently then the markets will deal with me accordingly. Every professional trader has mastered themselves and they continue to master themselves on an ongoing basis… THERE IS ALWAYS ROOM FOR IMPROVEMENT! As an independent thinker I can act with intent and purpose, I know what I want to do before I do it and I am prepared for the possible outcomes this is what trading psychology is all about, being prepared mentally for whatever is going to happen and being able to function in times of adversity, the ability to push on and persist when things are not looking too great, there will be hard times in trading and what differentiates the successful traders (5% of traders) to the unsuccessful traders (95% of traders) is how they think and what they do in the markets, with the right mindset anyone can be successful in trading and grow their account consistently. Having a success mentality will help one achieve success in all areas of their lives. I maintain trading psychology by having a plan for all my trades and take it one day at a time and one trade at a time with each individual trade following my rules and criteria.
Next up I’m going to touch briefly on a few strategies that I use to trade the forex market. I am a pullback trader and look to capture swings in the market using a Fibonacci retracement tool, trading with the trend buying at support levels in an uptrend and selling at resistance levels in a downtrend. I define an uptrend with a series of higher highs and higher lows, in these conditions I want the market to pullback and make a higher lower which is where I will be looking to go long and capture the swing up looking for price to make a higher high. I define a downtrend with a series of lower lows and lower highs, in these conditions I want to sell a pullback which would be the lower high and look to capture the swing down expecting price to make a lower low. I trade objectively, no opinions no ifs buts or maybe’s I define the market conditions and act accordingly using tested strategies that I have confidence in and have seen work time and time again, the numbers don’t lie.
The other strategy I use is also a trend trading strategy using either the 100 EMA (exponential moving averages) or the 21 EMA (exponential moving averages), it’s a mean reversion strategy/moving averages strategy. The aim here is to use the moving averages as dynamic support or resistance as the market moves in a certain direction, if price is trading above the moving averages then it is an uptrend and I want to only buy in this market, ideally, I would like price to move back down to the moving average and then enter long. The converse of this is if price is trading below the moving averages then the market is in a downtrend and I only want to sell this market, ideally, I want to wait for price to move up to the moving averages and then enter short. Trading with the trend is the best way to trade a market in my humble opinion, the chances of making money increase significantly and it puts my mind at ease knowing that i am in in the direction of the trend which is the path of least resistance.
The last strategy that I use is also very simple, it’s a range trading strategy which involves a market moving sideways. In a sideways market the price is stuck between 2 levels, a high and a low, price keeps bouncing around in between these 2 levels going pretty much nowhere. in these conditions I want to buy the bottom of the range or sell the top of the range, but I do not swing both ways in a ranging market, I am either only buying the bottom of the range or only selling the top of the range based on my bias or the prevailing trend before the range formed.
Patience, Persistence, Confidence and Discipline.
The last part of this post is going to be touching on the 4 traits that I carry with me every single day in the markets. This is a game for winners, even though we don’t win every trade we win in the long run because we are confident in our skill as professional traders, we are patient when it comes to allowing the market to do its thing and we are patient with ourselves, we are persistent and determined to make trading and investing work. When adversity comes we never give up, we push on and press on staying disciplined. There are hard times in trading but that’s what separates the elite from the mediocre. Being a patient enough to wait for the right opportunities, being patient enough to let the trades workout and letting the plan or hypothesis be confirmed or denied by the market. Being disciplined enough to make plans and execute those plans, being disciplined enough to take money out of the market without letting Emotions like greed get in the way of the plan, being disciplined enough to manage risk and stay consistent and the discipline to carry out and do one’s due diligence and run the trading business as such. Confidence, patience, persistence and discipline are key to success in trading and every other areas of my life, so I always carry them with me throughout all areas of my life.
To conclude I would like to say fortune favours the brave and I would like to also say thank you to Wayne McDonell for being my mentor and providing me with a wealth of knowledge. I would like to leave everyone with 2 quotes, one by Napoleon Hill which says, “What the mind of man can conceive and believe, it can achieve.” The second quote is from Wayne McDonell “Anyone can break from the crowd and rise above mediocrity and into greatness”. I hope that this post provides value to your life and your trading. Thank you for taking the time to read it. Feel free to leave comments, give feedback and ask questions. I wish you nothing but success and may your profits be above average.