It used to be that in order to compete in the game of trading, you needed to be close to the action, to the floor, to the street… But since the mid-2000s that all changed. With the internet came to access to markets from all around the world. With that comes the comfort of remotely trading. However, just as with any other type of work-from-home environment, you need to be disciplined in order to succeed.
We’ve compiled a list of 14 ways you can improve your trading from home.
1. The Power of Intention. Place deep thought towards what your primary motivation is for trading from home? If it involves visions of grandeur, you will likely be very disappointed. There isn’t the space to explore this topic here, but if you can’t crystallize your ideas and have them align with reality, then the rest of these tips are meaningless.
2. Have a dedicated trading space. The dining room table isn’t going to work. Commandeer a space to call your own, preferably with a door. It doesn’t need to be fancy, just yours.
3. Build a morning routine. My routine begins before 5 am with a pot of coffee. I enter my office, close the door, light a stick of incense, and meditate for 20 minutes. My first 3-hour pre-market routine is very scripted. That script gets me off to a good start each day. Build a routine that works for you. Be flexible enough to tweak it over time, but stick to it. It will make a world of difference to your outlook, productivity and trading results.
4. Set boundaries with your family. When my door is closed it means I am at work. My family knows that I am there to help if needed, just so it isn’t every 15 minutes. Active trading has a flow and rhythm to it. Constant interruptions are not helpful.
5. Do these things with every trade Write a trading plan; Appropriately size the trade; Set a stop and honor it; Execute your process; Recap your trade. What did you learn? Did you follow your process?
6. Start a Journal. No need to be Hemingway. Simply jot down in real time during the day how you are feeling mentally; observations on the market, thoughts about a trade, re-activities you may feel about disappointment or elation over a trade. Over time, you’ll gain huge insights into how and why you do the things you do…both good and not so good.
7. Optimize your environment. Get the best chair and monitor you can afford. Make sure your desk height fits your body. Have good lighting. Make sure you are not physically fatigued by your set up. You don’t need 6 monitors to be successful, but you do need a few nice tools to keep your body fresh while in the chair.
8. Emulate great traders even if you don’t know any. Can you imagine George Soros in his prime getting lost watching YouTube videos? Do you think your favorite hedge fund Titan is logging into trading chat rooms and debating trades? We’ve all been there. When I cleaned most of this stuff up, my trading improved. It will for you too.
9. Value Process over Results: The roadside is littered with the dead bodies of aspiring traders who were obsessed over their P/L. Long-term market participants lean on and are slaves to their trading process. Develop one you can count on.
10. Understand and minimize your costs. A hundred years ago, Jesse Livermore told us commissions matter. Understand ALL your costs. Trade services, data feeds, chart program, commission structure …. Itemize and understand your costs. These costs add up to real money. Eliminate costs that don’t truly deliver value to your trading. Remember, you are running a business.
11. Develop a secondary income stream. It may sound glamorous to “Trade for a Living” but that will wear off after taking zeros for 6 months. Ask me how I know. You likely have some great skills developed during your working career. Why throw that away? People will pay for your skill set. Can you be a consultant? Can you work for your former employer one or two days a week? Could you be a trainer for new hires at your company or within your industry? Would a competitor pay handsomely to learn the skills and information you hold? I can assure you that you will appreciate that income when trading income becomes lean. Be creative! Don’t worry, the market will still be there when you return. You won’t have missed a thing.
12. Cultivate your Psychological well-being. Brett Steenbarger, noted psychologist and trading coach, suggests that there are 4 components to psychological well – being. Happiness, Fulfillment, Energy and Affection. Actively cultivating all 4 components arm the aspiring trader with the ability to perform at a higher level under stress and helps ensure stress does not become distressed. Here’s my spin on a few of these components.
- Develop a passion outside of trading. My passion is cooking. It relaxes me. I can clear my mind while doing something worthwhile for my family. Maybe its golf, oil painting or charity work for you. Trading is a worthwhile passion while you have a full-time job. When trading becomes your profession you’ll need something else.
- Energy. Until recently I have not put much effort into structured exercise. Now I am making a point to walk each day and do some light free weights. I feel better. Evidence exists to support the idea that when you feel better, you trade better. Give it a try and tell me what you think.
- Affection / Family life. It’s easy to get lost in your trading life. Think about this. How would you feel if you became a great trader but lost your family in the process? You would not be the first one. Take out your calendar and schedule a non-negotiable time to cultivate your family life. Date night, family fun night, summer vacation, weekend getaway, attend a ball game, go to a museum, …..whatever it is. Give the family an early heads up so they can look forward to the event or activity. The calendar will remind you but you’re the one that must make it happen. You can thank me in 10 years when you’re sharing your well-deserved success with your family.
13. Buy a small mirror and put it on your desk. One of my all-time favorite quotes about trading is from Market Wizard Ed Seykota who says“Everybody gets what they want out of the markets”. Look in the mirror twice a day and think of the quote. If you are not getting your share of success, it isn’t the market’s fault, it’s yours. When I look at my own failings, it’s all self-inflicted wounds. At the end of the day you are not battling the market, you are battling yourself. I am convinced that all the answers we seek as aspiring traders are in the mirror.
14. Develop a Mastermind Group. You won’t be able to attain your goals alone. You’re going to need help. Great leaders, great CEO’s, sports superstars, and yes, great traders surround themselves with people they trust who support them, challenge them, and hold them accountable. Assemble a mastermind group of your own. Find people you trust to fill these roles: Banker, Risk Manager, Spiritual Advisor, Trading Mentor, and 2-3 traders you connect with.