One part of my daily routine is to check social media. We want to stay connected.
These are a few of my favorites. If you have any new social media sites that we should follow and participate in please send us the information and we’ll get connected. One of the great things about social media is that it keeps us connected. One drawback is that it can create a distraction while work is supposed to be done.
It makes me remember the advice my grandma used to give me, moderation in all things. You have to learn to balance the value you can add to your day by using social media as a tool while also watching out for the traps it creates to suck you in and waste time.
With trading, it’s no different from any other business. There is a lot of value you can pull out from cyberspace to keep you informed and provoke your thoughts. There are also many distractions.
Just today while I was gathering information for this newsletter I found myself reconnecting with a friend from 10 years gone by, reading about the moon that would be in full view tonight (and spectacular), acknowledging Rory McIlroy’s recent triumphs at the PGA championship, looking at pictures from a recent family vacation and taking an online test to finally identify what people like about me the most. It’s my smile – according to the internet at least.
There’s nothing wrong with burning time, it is a Sunday after all, but when there’s work to be done I personally need focus and structure. Distractions can create a creative black-hole where ideas go to disintegrate and cease existence. Being self-aware I’ve tried to change my routines, create positive work environments and eliminate these distractions. I read an article by James Clear at buffer-social called ‘You’ve got 25,000 mornings as an Adult: 8 ways to improve your Morning Routine’. It was fantastic and it hit home today. I already use some of these techniques but those that I don’t I’ll start.
The short-list is provided below, for the full article visit
1. Manage your energy, not your time
2. Prepare the night before
3. Don’t open email until noon
4. Turn your phone off and leave it in another room
5. Work in a cool place
6. Sit up or stand up
7. Eat as a reward for working hard
8. Develop a “pre-game routine” to start your day
Now this list was designed to help people with their everyday life. I want to talk about it specifically in regard to running your trading business. There are many products that you can trade. Stocks, options, Foreign Exchange, Futures and options on Futures are a few that come to mind.
Why you trade a certain product should probably correlated to when you have the most productive energy. If you’re a night-owl and live in the US than FOREX is probably something you should learn to trade. The optimal trading time for most pairs either happens in the evening or throughout the night. If you’re a morning person, get up and are ready to tackle the markets then the pre-market futures market might be for you.
Futures open before the stock market does and is generally in line with economic data that comes out that day. If you prefer a more methodical approach, hold trades for swing or position durations and want to trade after the open or mid-day then stocks and options might be best. I trade all of the products mentioned above, but not every beginner can do that. Talk to a mentor, coach or get advice from the Trading Justice Podcast by posting on the forums with a question to help you make this decision. It can affect your overall trading system and thus your profitability to make sure you choose a product that is in line with your most productive time to trade.
Preparing the night before can help you with efficiency. If you find yourself spending too much time reading the news, finding stocks to trade, learning to use your software and other tasks that you could do in advance consider a short session at night to prepare you for the trading day tomorrow.
Some of the other items on the list really apply to trading success. When you’re trading you need to stay focused. Distractions from email, text or (see above) social media can derail your momentum while you trade. Consider putting your phone in the other room, turning your email off and focusing exclusively on your trading while you’re in front of your computer. I’ve talked to traders who tell me it takes them hours to run a trading business only to find out that most of that time was spent on things that had nothing to do with trading. If you want the best results then try to eliminate distractions.
Every few hours during a trading day, or any day for that matter, regardless of the project and importance of said project I get up and walk around the block and let the sun, rain or snow hit my face. I have worked using technology and computers for a long time and I know that most people are more productive if they give their bodies and brains a rest every few hours. Some people have the instinct to just cram and hammer it out. But getting up, stretching your legs, drinking lots of fluid and moving around do increase productivity, creativity and efficiency. Try it, you’ll be a better trader if you do.
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The markets have an air of discomfort surrounding them right now. In every conversation I have with active traders it’s clearly there. Individuals who track the markets actively are talking about geo-political concerns, over-bought long-term valuations, impending Federal Reserve policy changes and Technicals on the Charts for the major indices that make them at least uncomfortable and in some instances down right predicting a market failure. The reality is that the market does have risks and that’s why we’re all talking about them. But, and its important to note, that the market has not failed in the face of these risks. None of the aforementioned conversation points have driven the market into a major sell-off. Does that mean that it won’t? No, of course not. So as a trader we simply need to grit our teeth, trade the conditions in front of us and prepare for changes in volatility if they do come.
Last week was a light week in terms of economic data. There wasn’t much to speak of. THe utilities sector has seen pressure in recent months as traders have taken profits from the dividend paying stocks. Stocks in general are down during the 3rd quarter, but by and large not to a very significant degree. The high yield bond market of corporate and ‘junk’ bonds has seen some selling as investors move away from risk. The major indices did bounce back towards the end of the week but remain in a week pattern that some would identify as a developing bearish retracement with a lower pivot high and lower pivot low.
The Dow Jones Industrial Average and S&P 500 are notably developing a Kiss of Death pattern where support has been broken and then a rally from a lower price is bringing the chart back into old support. This is generally a very bearish pattern.
The Metals sector has been stuck in the same old pattern of volatility, then more volatility, as the charts have gone through up trends then down trends over the last several months. Opinions about the price of metals are all over the place. The most prudent approach would be to wait for a clear trend to develop on both the daily and weekly charts. As of now, especially in regards to Gold, the chart is neutral at best.
The same can’t be said for Crude Oil which has been in a clear Downtrend through much of the summertime. Oil prices have been under pressure in the face of the US Dollar rallying. Lower highs and lower lows are the definition of a down trend and that’s where oil has been since mid-June. Watch for a bear rally, then another pivot point for a potential entry point in the direction of that trend.
The US Dollar, as mentioned before, has seen some impressive strength. The Dollar drives commodities, treasuries and stocks alike. If you aren’t watching the dollar then add the Dollar Index to your daily routine.
On the options side of the market, the Volatility Index recently spiked due to perceived market risk and actual price movement. This was a prime entry point for credit spread traders to jump in and sell Theta, Vega and take advantage of increased option pricing. In the face of light economic data in the next week, its hard to argue with that position from a short-term standpoint. Selling weekly options is a good strategy for experienced option trades that know how to hedge and control gamma risk.
This weeks slate of economic data will focus on Retail Sales and Consumer Sentiment. While both are important metrics, neither is going to change the Fed’s overall policy decisions in the short-term and thus lack the headline risk that may be necessary to produce a market sell-off.
In fact, the most notable catalyst still resides in the charts themselves. Earlier we mentioned the developing Kiss of Death pattern on the daily chart. The pressure we have seen on the indices has been accompanied by an increase in volume and on higher range days. This is generally and indication of Institutional re-distribution, hedging and profit-taking. So what does it mean? It means the market acknowledged the risks that we spoke of before regarding politics, the Fed and over-priced valuations and took action. Where we move from here will be dependent on how traders process new information coming down the pipeline. The patterns are set up for traders who can trade with the action of the day and be nimble enough to change strategies as things develop.
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Regardless of the market conditions, you need to remember that trading requires your full attention each and every day. To get the most out of your time while you are running your daily trading routine try some of the ideas from earlier in this newsletter. Time is the most valuable asset we have, so any way we can find to make the most of it is invaluable. Good luck this week, and be sure to catch us on our Podcast, post in our forums and connect with us on all of those social media sites that were mentioned earlier.
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