Trading Justice’s Weekly Routine
If you’re an investor or trader, the weekend is probably the time you should slow down, think about where the market is and do thorough research. This is an opportunity to plan and prepare for the coming week of trading, investing and to make sure you’re moving your business forward one step at a time. As a veteran trader, I have my routines dialed in. I’m going to share with you how I approach the weekend, and what I’m trying to accomplish in a step by step fashion. Hopefully, you can use this as a template for yourself.
Often, new traders want to jump ahead of the key steps, and simply put their money into a trade or a stock they want to invest in. They want shortcuts, and believe me, I like shortcuts too, but you have to train your brain to analyze this data so you can make confident and informed decisions. You can’t just jump to the answer, or the last 5 minutes of the movie. Take the time to go through the process step by step so you can develop your skills as a Trader and Investor. If you’re looking for some training, and a pdf on how to go through this process there is a free guide and course over at Tackle Trading on their 7 Step Guide.
Step 1: Market Analysis
I always conduct a thorough big picture analysis before I dive into individual trades, or other research points. This includes reading newsletters, articles from sources I trust, and of course reviewing the weekly Market Scoreboard. The Market Scoreboard is a great way to start the week, because these are trained and experienced traders who go through a step by step review of the major market Indices, as well as the sectors and market internal Indicators that are important to analyze. I suggest you start with this report each week, before you dive into other sources.
After I review the market scoreboard, I then will read some fundamental analysis articles, or review the week’s news. I particularly like Briefing.com’s BIG Picture article, which comes out each Friday. There is a process to analyzing the market that includes Fundamental and Technical Analysis. Briefing.com is more of a fundamental analysis of the market, as they tend to look deeper into things like GDP trends, economic data, Valuation and traditional metrics. It’s a good article for you to add to your weekend routine.
After I’ve done some analysis of the technical and fundamentals of the broad market, I always look at an economic calendar for the previous week, as well as the next week so I can plan for any key reports that are coming out. There are many sources I like, if you trade currencies as well as equities, options and commodities then a great source is ForexFactor’s Economic Calendar. You will need to learn to use the filtering function on the top right, to filter only for the key reports and for the currencies that are important for you personally to look at.
On the weekend, I also dig further into Sector and Industry analysis. I’m trying to learn more from the individual sectors as I have more time at this point to analyze than I do on a given trading day. There’s an old philosophy for Sector Rotation which is explained in this ChartSchool article. Then, I will use some tools, charts and graphs to better understand sector performance, to identify if trends are changing in the markets. Performance charts, or perfcharts for short, have been around for a long time. There’s a great one here that analyzes all of the Sector Spiders against the SP 500.
Step 2: Choose a Trading Strategy
The purpose of doing analysis, is to confidently pick a strategy to use to put your money into. If you haven’t done any training on systems, I would suggest putting your time into developing your trading acumen, skillsets and execution. There are countless ways to approach trading, but, remember, the higher ROI systems inherently have more risk. That’s the way markets work, if you go out to make more money, you must take more risk. That’s a good thing by the way, RISK is not just a fabulous board game we played as kids (and adults let’s be honest) but It’s a key component in building profitable trading businesses. You will need to have an account, the skill to enter trades, build orders, manage positions and the discipline to do all of this consistently to be a profitable long-term trader. If you don’t have an account yet, set one up. Tasty Works is great for traders who are ready to trade in the market, and want to get great commissions for options trades. If you want to do some of your own research, Barrons.com does a yearly review of all of the online brokers and you can read it here.
Assuming you have the account, the skill to execute a system and rules that will help you know how to build, position size and manage the trade, step 2 is about picking which strategy you should use now. Complex systems are fabulous in many ways, but not everyone can pull them off. I’ve found that many new traders have too many strategies they’re willing to use, and spend time on, when they haven’t perfected a few systems. For example, do you have a fundamental and technical methodology for picking a stock, to buy and hold for longer than 1 month as a position trader and investor? If not, consider starting with ETF’s, developing your skills and learning more about evaluation. The Tackle25 List of companies is handpicked by the Coaches at Tackle Trading, and it’s a great watch list to use to help you find trades. I also will go to all of the Scouting Reports, and in this order: Stock Report, Options Report, Commodity Report and Stock Report. These reports are premium reports that are for paid members of Tackle Trading. If you are a member, great! If not, you can try 15 days here and start using the reports.
Which trading strategy you use, should be a part of your portfolio structure. I’m a believer in starting with Cash Flow strategies like Covered Calls, Naked Puts, Vertical Spreads, Calendar Spreads, Iron Condors and Butterfly’s. Remember, even if you just focus on one of the above and master it, you then can have a strategy to get you into the market. Don’t try to do too much at once. Some traders will build their entire business around a handful of techniques, and then perfect them.
I also use Growth and Speculation trading. Over time, you will need to develop a playbook, and frankly, it will never be finished, as it’s an evolving document. But the more clarity, simplicity, and direction you can build into your strategies, the better. Don’t choose complex travel routes, when the simple ones work just as well or better. Keep it super simple (KISS).
Step 3: Find Candidates to Trade, and Analyze them
This is where you can split in one of many directions as a trader. I have premium services like the Scouting Reports at Tackle Trading that will help me get some trading ideas quickly. I watch the Stock Report, Options Report, Commodity Report and Forex Report each weekend. There is a process I go through with these reports, I write down the trading picks first, analyze them myself, and then watch the video from the coach at Tackle Trading who put the report together. I don’t trade all the picks, in fact I hand pick the ones that fit my design and my ideas. It’s just a time saver, and it’s a simple way to get me some candidates to use my strategies with. By the way, even if the report says they’re going to trade it with a long stock or a call option, I’ll use a Bull Put, Naked Put or Covered Call if I find it to be better for my system. I use the reports as a simple scanning tool. When you’re new, you’re going to want to dig deep into the logic of why the coaches picked them, and that’s smart to do. But, once you have your systems down you’ll probably just want the symbols, the ideas and to implement them into your business if they’re appropriate.
I will then use scan’s and tools from sources like Finviz or within my brokerage tools like TastyWorks or THinkorswim. If you’re looking for some training on how to scan, here are 3 basic Finviz tutorials on their screener that you can use to help you with that tool. Once you have the products, you will still need to analyze them. If you’re trading directionally, this can include components like technical analysis, measuring PAY ranges, estimated entries, exits, stops and applying techniques to help you build the trade. If you haven’t gone through it yet, I’d recommend you watch the Technical 101 and Options 101 series in the Learning Center at TackleTrading. If you’re going to trade something that is designed for Cash Flow, then you should have downloaded and saved a copy of the Theta Spreadsheet we use. This will help you compare one candidate to another, and make decisions on whether you should or shouldn’t pull the trigger on the trade.
Finding candidates and analyzing trades is a lot easier when you have resources to help guide you. But the confidence to pull the trigger and take the risk on of any trade comes from design, experience and the nature of your business. If you haven’t built a power team or networked much with the community of traders that we’ve built, then do so! Ask them, what strategies they use, how they trade and what direction you should take. The Clubhouse is a fantastic place to do it, but all of the social medias are there as well. We tend to be most active on Facebook, Twitter and Youtube, but we have a presence on all of them.
Step 4: Plan the Trade and Build the Orders
Two of my favorite trading books are 1st – Trade your way to Financial Freedom by Dr. Van Tharp and 2nd Trading in the Zone by Douglas. Both are mostly mindset books and have lots of value, if you haven’t read them go out and get a copy. They were featured in our Book Club Podcasts last year, you can listen to those episodes Trading Justice #161 and Trading Justice #192 and learn about the mindset built into those books. One thing that is consistent in these works, is the idea of taking the emotion out of your trading. The best way to do this, is to pre-plan the mechanics of your trading decisions in advance. Planning the trade means you must look forward and make decisions about what you’ll do in advance on all of the different factors that can happen.
Start with the risk. If you’re wrong, and the trade doesn’t work, what will you do? Do you have a stop loss? Have you entered a contingent buyback? Will you hedge the trade? Will you do something different that needs to be defined? There isn’t one perfect answer for everyone, but what I’ll tell you is that when I trade I try to automate (through orders with my broker) as much of the exit as I can. I use risk profiles to better understand what I can lose. I map it out. I write the earnings date down, and make sure I have alerts and rules on how I’ll deal with it. Spend the time at this moment – when you enter – to plan this trade out and it will make your life and trading account easier to manage as it develops.
After you’ve built in your risk controls, define and build in your profit goals, targets and orders (if appropriate). Some strategies are open-ended profit targets, others will have strict profit exit rules and targets. Whatever your strategy is, make sure it’s clear on what you’ll do.
Step 5: Journal
As a trader, you need to keep score. You can journal in many ways. I’ve seen traders build their own spreadsheets, use tools online, tools from their broker and even do them by hand. However you choose to journal your trades, you need to do it.
- Entry date
- Strategy
- Quantity
- Entry price
- Exit date
- Quantity
- Exit price
Also, any notations about your decision-making process are all parts of journaling. If you don’t have a journal yet, you can get the Tackle Trade Journal here. I also keep a physical journal where I write my daily thoughts down by hand. It’s helped me over the years, consider trying it.
Tim Justice