“I have a full-time job and rarely sit in front of the computer when the markets are open. All my trading decisions are done when the market is closed, but I am having problems deciding exactly where to place my entry orders, with the current market being so volatile. Can you please give someadvice on how to place entry orders when we’re unable to sit in front of the screen all day and day-trade into positions…”

Dr Alexander Elder, SpikeTrade.com responds:

The market is very volatile these days, presenting a problem for position traders. No matter how clever your entry and exit techniques, one cannot fully overcome the disadvantage of not having live data in these unusually volatile times. There is nothing wrong with sitting back and waiting. Use this time to study, do research, and create plans for more peaceful and trending times. If you’re strictly a position trader you may have to sit on your hands until more opportune times.

One possible advice for a position trader might be to wait until the markets settle into a reasonably steady trend. Another advice is to be extremely demanding about entries while being very skittish about targets at this time. Put your buy orders ridiculously low – you may not get filled, but if you do, it’ll be at such a low price that a bounce is virtually certain. Put your shorting orders higher than you expect a stock to go – again, you may not get filled, but if you do, there will be almost certainly be a pause, allowing you to grab some profit. Speaking of which – do not overstay your trades, keep your finger on the trigger. As soon as you have a bit of an open profit – grab it! There are markets for holding and markets for quick hit-and-run, such as the current one.

The Daily Routine Of A Trader

 

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The answers will vary from trader to trader, depending on their primary style of trading. Day-traders’ preparation is different from swing traders or trend followers. The suggestions that follow are more suited for swing traders.

Here’s a brief outline of my personal routine:

1. I do a quick mental self-assessment to determine whether I should trade that day. I make this determination before 8 am, typically during my drive to the office.

2. I do a market review to determine current conditions and key support resistance levels. This helps me determine what actions I may need to take with existing or potential trades. I like to do this soon after the market close, in the afternoon or at night and then do a quick review of my analysis the next morning before the market opens.

3. I review any existing positions and formulate plans for the management of those trades. I enter any orders or set alerts to be notified to take action.

4. I review any potential trades from my active watchlist and set alerts accordingly, to enter any orders if necessary.

5. If I’m not fully positioned, I run scans for trades in my personal basket of stocks. If I am fully positioned, I must sell something before taking another trade.

6. I review foreign markets and any key reports that are due today. I skim the headlines for any unexpected news.

7. Once my plans are in place, I try not to look at the screens until I am alerted to take action. When away from the screen, I use trigger orders to enter any trades. When an alert goes off, I click to that particular chart to execute any decision.

8. I do not look for trades during the day; I only focus on my trade plans and existing positions.

9. I watch no TV during trading hours, wishing to trade in quiet, with as few distractions as possible. I work on projects during trading hours until I am alerted to take action.

10. After the market closes, I repeat my routine of market review and adjust trade plans.

11. On weekends I do the same routine as on weekdays, except for some additional analysis of longer-term charts. I do most of my reading on weekends.

12. I have a reading file into which I put all articles of interest for reading at a later time. I try and block out a couple hours each weekend morning for this follow-up reading.

This is only a brief outline of what I do each day and on weekends. My personal trading takes approximately one to three hours per day. It varies, depending on the type of market conditions. If I’m not in a trading mindset, I avoid trading at all costs because that’s when I make my worst trading errors. I used to be a hyperactive trader who never knew when to stop, and then I made a sign I’d put on my screen to mark whether it was a trading day or not, similar to a store’s open and closed sign.

Basically I want to operate as a two employee company. The Analyst does the work when markets are closed and sets various work orders for the Trader. The Trader’s job is to carry out those orders. The Analyst may give the Trader a choice between options A or B, but the Trader is not allowed to carry out work in a way that was not spelled out by the Analyst. If he does, fire the Trader.

Dr. Alexander Elder is a private trader and a teacher of traders based in New York City. He is the author of several international best-sellers, including Trading for a Living, and Come into My Trading Room. SpikeTrade.com is an international website that runs a weekly competition for the best trades in the US stock market.  The winner of each weekly round writes a report “How I Won My Gold.’ For more information and a trial membership please visit www.spiketrade.com