Routine Versus Ritual

What are your daily habits?

I think it’s important for aspiring and new traders to time-block their days. Write down everything you do from the time you get up through to the time you go to bed. Notice especially what is happening in the background. If you have music or TV on, write that down too. If you have certain or specific people around you OR NOT, write that down too.

Linda Bradford Raschke suggested that beginners follow a single market and write down the price action in 5-minute intervals. This could go under research for example, and IMHO I think it’s a great exercise.

I would define your routine to include trading your model or doing what you think you need to do to make money. How you get your trade ideas, entering orders, and research for example. If you don’t have an algorithmic model yet, that’s ok – you’ll get there.

A ritual, on the other hand, is something that feels good, but doesn’t necessarily make you any money. “I get up, hit the can, put on the coffee.” Putting on the coffee is a ritual. Reading the paper while you’re in the WC, is also a ritual.

Surfing the web while at your desk during market hours is probably ritualistic too: it’s a form of entertainment. You may disagree b/c you may get what you think is very valuable information from the blogs. I do not think that is research per se, b/c I believe that everything you need to know about what you’re trading is always reflected in its price. I do read lots of blogs, but I know what it means to me and my time and how it may or may not benefit my trading: it doesn’t benefit my trading, but I like to do it.

Trading IMHO, is also mechanical. Some of the best traders trade by having their orders on the floor, while they are out doing other things. Being a trader does not mean being glued to your screen. It looks good in movies and on TV, but it kills your eyes. Being glued to your screen may be a big, macro ritual that leads you to FEEL like you’re being a trader.

Paul Tudor Jones said that trading takes place between 5 and 10 pm. Get it? The markets are closed. He’s laying out his plan for the next day or days. My guess is that he’s unavailable to anyone during that time frame. Who gets face time with you when you are laying out the next day’s goals, objectives, and trading ideas?

One of lessons you’ll garner from this exercise is to make sure that you are doing the things that make you money most of the time. If the statistics are correct that we are using only 10% of our brains, we need all the critical time we have to make it count in our trading. If you have trouble focusing, we’ll address that in future blog posts.

You can send me your daily time-block if you want and I’ll give you some free feedback. One of my courses at UCLA will deal exclusively with these concepts. I reserve the right to use your question or material (maintaining your anonymity of course) as a future blog post for everyone to learn. You will not be humiliated nor shamed in any way. I study my own behavior as such.