Your daily routine should not take more than 30 to 60 minutes. If you find that your trading routine is taking longer than that, it’s typically because you’re over-analyzing, staring at charts, or don’t know where to go to get the information. Remember, it takes time to get efficient at trading and processing information. Some days, you’ll find that you spend more time than other days. This is typically due to major news events such as the FOMC.

1)  Check the news: Markets move on information. Information is constantly flowing in this world we live in. If you live in America, markets are open and trading around the world while you sleep. Economic reports and policy decisions may have been released in China which in turn triggered a rally in London. By the time a trader in the U.S. gets the news and interprets it, he’ll already be seeing an impact in markets. Almost every day there are reports (The Unemployment Report, The Consumer Price Index, The Producer Price Index, and many others) that are released from government institutions and agencies that can have an impact on markets.

Can we predict the reaction the market will have? No. That’s not what you’re trying to do at this step in your day. Your sole job while reading the news is to get the information and try to process it. Try to understand it. Over time, you’ll develop a market posture, an opinion on where markets should be heading, based on the news flow and reaction markets have to it. At this stage of the game, just try to listen in. Over time, if you check the news daily, you’ll become a smarter trader, a more informed person, and you’ll have a better understanding of how the economy is part of everything. Spend five to 10 minutes, get to the core of the information, and move to the next step. There are many good news publications that are all very similar. It’s important to scan the wire to ensure that you understand what the market is focused on. Don’t spend too much time scanning the wire or checking the news as it can get very overwhelming very quickly. Simply read a few articles that are market related. If you are investing in certain companies, you should also read any news that is relevant to your investments. In the Trade Center tab at www.tackletrading.com, there’s a news section.

2) Check the economic calendar: There are three primary reasons the markets move. The first is behavioral analysis of the emotions of the market. Second, technical analysis of trends, patterns, and support & resistance. The third is the most important: economic analysis. We study economic analysis through the economic reporting system. Reports such as FOMC events, unemployment, manufacturing, retail, housing, consumer spending and confidence, and gross domestic product (GDP) are reports we receive almost every month. These reports drive market behavior. The trader needs to identify the report on a daily basis (sometimes there are none) and assess how the report impacted the market. This includes analyzing the /ES and /DX, which are the S&P 500 and US Dollar indexes. The first month analyzing economic reports is overwhelming and confusing. The second month gets much easier. The two economic reports I use are at www.tackletrading.com and www.forexfactory.com. Some economic reports are so important that the trader may want to hedge the report.

GDP

3) Scan the heat map: Heat maps are very important to assess. They allow us to get a broad assessment of the market on a daily basis.

Map

4) Check the indices: There are dozens of indices. An index is simply a basket of a certain kind of stocks that are measured as one unit. The Dow Jones Industrial Average is the accumulation of 30 of the top industrial stocks. The Standard and Poor’s 500 is simply 500 of the largest US companies measured through one chart. Locate the symbols ($INDU and $SPX for stock software users) and pull up a daily chart for each of these indices each day. What are we trying to see? In general, you’re trying to get locked into the current trend, volatility, and action in the markets. It will help you make trading decisions. Spend five to 10 minutes and move to the next step. There are many other indices. For a beginner trader, simply look at the big ones as they will give you a good read on the entire market.

  • SPX or /ES – This is the major market index for the US stock market. Look at this daily to get a brief idea of what is happening in the trend, the action in the market, and so forth. Don’t overthink it.
  • VIX – This is a measure of implied volatility on the S & P 500. Look at this daily to help determine what strategies you’ll want to focus on. When the VIX is low, options are underpriced and you should use positive volatility trades (long call, long put, calendar spread, back spread). When the VIX is at a high or a peak, use negative volatility trades (short call, short put, short strangles)
  • /DX – The US dollar. You can also analyze UUP as an ETF.
  • /CL – Crude oil. You can also analyze at USO as an ETF.
  • /GC – Gold. You can also analyze GLD as an ETF.

5) Portfolio management: Manage the trades you’re in (five to 30 minutes). Every trade must have a plan. If you buy stock as a long-term investment, you may not have much daily management. You might just look at the current profit and loss in the position, make sure the trend and pattern are intact, and move on. If you are trading, buying with the intent to sell back to the market short-term, you’ll undoubtedly have more daily checklists to follow. You may need to adjust your stop loss, check the news on the company, and make your judgment call. The details of this step will be dependent on what strategies you are using. In the coming chapters, we’ll give you different stock strategies to start with and you’ll learn the management rules. Over time, as you use other products such as options, futures, or forex, you may have individual rules set up for each product and strategy. It is important to have a design, rules, and to follow them. Each day, before you go look for that next money maker, take some time to make sure the positions you have are being traded according to your rules and money management. This should take five to 30 minutes and then you can move onto the next step.

  • Pull the weeds first. It’s more important to get rid of the trades that aren’t working than it is to take profits on trades that are.
  • Work through your positions methodically; make a decision and move on. Once you’ve made a decision for the day, stop watching that position.
  • Assess your delta to ensure the portfolio is moving in the direction of your portfolio bias.
  • Assess your theta to ensure that your theta target is accurate. Theta defines how much we are making or losing each day based on theta. Traders typically like to carry a positive theta ensuring positive cash flow on a monthly basis.

6) Enter new positions: Traders will base the decisions of new trades based on what their portfolio needs. If the portfolio is too bullish, they’ll look for bearish trades, while if it’s too bearish, they’ll look for neutral trades. They’ll also base this on their theta target. If the theta target is not being hit, the trader will look at strategies that add positive theta. Only after you have checked the news, read the markets, and managed your positions should you go find new trades. Researching, decision-making, and entering orders can be exciting and a lot of fun. You should approach it strategically. What has the market been doing lately? What patterns are most prevalent? What scans can you run to find candidates to trade? What do you expect in markets next? You’ll get a better feel for this as you trade, but for now, try to find new trades and enter orders frequently. You may not see anything specific in the market and thus may not make a trade every single day. On the days you see a pattern to take advantage of, though, then this step is where you go to work to find trades. One mindset that can work well is to think of researching candidates as a process of elimination. Work through the entire list and try to narrow that down to a handful that you like the best.

  • Check your bullish and bearish watch lists.
  • Run technical scans.
  • Look at the Tackle Trading Scouting Reports.
  • Check the Tackle Trading Tackle 25.

Personal study: It’s cliché, but life is definitely a journey. You’ll never know everything there is to know about markets. You’re a committed student, so always keep that in mind and approach education with passion. However, as a trader, don’t make it the first thing you do. Try to conduct your trading business (steps 1-6) before you crack your book and read up on the next set of strategies or ideas. You’ll be exposed to plenty of ideas, classes, trading strategies, and new content. Make sure that you are trading while you learn.  The reason this step is last is to remind you to focus on trading first and then study after you’ve done your daily job. The skillsets you desire will come faster if you practice.

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All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.