Tuesday, May 14, 2019

Trading Psychology Techniques - 4: Developing Your Morning Routine

In the previous three posts in this series, we have taken a look at managing our energy for peak performance; testing our trading ideas to provide us with knowledge and confidence in our trading edge; and the do's and don'ts of constructing a trading journal.  To an important degree, these three elements of success can come together in well-crafted morning routines.

I have consistently found, personally as well as in my work with others, that how we live our mornings sets the tone for the entire day.  I've equally observed that how we start our mornings sets the tone for the entire morning.  In life, as on the racetrack, getting off to a good start does not guarantee a win, but getting off to a bad start puts the winning odds against you.

Here's a general rule for successful morning routines:  whatever you are trying to develop in your life overall, make sure it's an active part of your morning.  Whatever goals you have--personally and in your trading:  make those integral parts of your morning routine.  You want the morning to provide an emotionally impactful set of experiences that enables you to sustain the sense of moving forward.

Unfortunately, that's not what many of us do.

Too often, we roll out of bed, shake off the cobwebs, grab some food and coffee, and start our day, whether it's with a commute to work or time in front of screens.  In such a situation, we've gained nothing from our mornings, but we *have* internalized the habit of living life on auto-pilot.  If we live life in routine ways, can we really expect to excel?  If we start our mornings without direction and purpose, can we truly live the rest of our days productively and meaningfully?

Whatever functions you want to develop in your life, exercise them in the morning.  That internalizes the sense of living life intentionally, meaningfully, with purpose.

My mornings typically begin early (between 4 and 5 AM EST), as I follow markets and communicate with traders overseas and prepare either for a day of work at a trading firm or a day of trading and writing.  Here are the usual elements of my morning routine:

 1)  Prayer - In my tradition, there is a wake up prayer that begins Modeh Ani (I give thanks).  The idea is to begin the day on a note of gratitude and spiritual connection.  What I *don't* want to do is begin my day cluttering my head with ego concerns:  things to do, worries about markets, etc.

2)  Cats - If I don't get up early on my own, our four rescue cats pretty well ensure that I'm up to take care of them.  All our cats were either neglected, abandoned, abused, sickly, or some combination of those.  We have socialized them and they have become quite loving, toward us and toward each other.  Each morning I greet them, pet them, change their water, give them food, and clean out their litter.  I take care of them before I tackle any of my personal priorities.  In acting on our values, we cement those as active parts of ourselves.

3)  Quick Market Update and Look at Emails - The evening before, I've updated my market research and formulated tentative ideas and plans for the trading day.  I quickly review market activity during the overnight hours (in Asia and Europe) and, if necessary, do a quick update of my ideas and plans.  I scan emails to see if there is anything pressing and respond as needed.  This is also when I set goals for the day and enter them into my daily calendar.  The calendar ensures that I attend to the things most important, whether it is book writing, attending a class, or getting work done at home.  I often do this update while listening to inspiring music; this is the music I'm listening to at the moment.  

4)  Exercise - This includes time in a massage chair, stretching, weight lifting, and jogging on a treadmill.  The idea is to first warm up and then push my limits, both with strength and  aerobic conditioning.  I keep track of my reps at each station in the indoor gym and my treadmill measures my distance run, pace, heartrate, degree of incline, etc.  I also wear a Fitbit that records my exercise minutes as well as the quality of my sleep, my heartrate, etc.  This helps me be accountable for getting in shape.  I want to begin the day pushing myself, breaking a sweat.  We don't grow unless we push our limits, and we don't push our limits if we stay in our comfort zones and never break a sweat.

5)  Morning Prayer, Meditation, and Reading - Once I've worked out the body, it's time to engage mind and spirit.  It is during this time that I want to be connected to the meaning and significance of what life is all about.  In a very important sense, the prayer and study are to the mind and spirit what the exercise is to the body:  a way of building our capacities.  In the case of prayer and reading, I'm building the capacity for quiet focus and inspiration.  During this time, I engage in meditation exercises for the same purpose.  The goal is to be energy-filled from the exercise, but also centered and focused in tackling the rest of the day.  

6)  Family Time - A longstanding tradition is that I make coffee and bring a small breakfast in bed for Margie.  That is a nice time to connect and start our day.  Usually one or two of the cats will be clamoring for attention at this time, so we spend a little petting and purring time together.  

7)  Following Markets - Here is where I will dig in, update my research, and revise my ideas for the day's trading.  If I've been successful with the prior elements of the morning, I'm usually pretty good at staying open minded for the start of trading, framing my ideas as "if-then" scenarios that tell me what I'll do under various market conditions.  That scenario planning will also incorporate goals that I've formulated from the trading journal the evening before.

8)  Reassessing - Although most of my trades are intraday, I don't want to trade reactively, jumping from one trade to another.  I reassess my plans and scenarios based upon the outcomes of the initial trades I placed.  This enables me to adapt to market conditions (if they are slower or busier than usual; if there has been a breakout or important news), but it also tells me if I need to re-evaluate my views or perhaps double down on them.  Very often, the first trade is smaller, as a kind of feeler in the market, leading me to reassess and place more significant trades based on that learning.  I always want the current trade to benefit from the trades placed most recently.

How you construct your morning routines will of course differ from what I do.  The important thing is to be the person in the morning that you want to be during your trading--and during the rest of the day.  Notice how much of my morning routine has little to do directly with trading, but everything to do with being in the right state of mind, body, and spirit for good trading.  We want to live our mornings with purpose and meaning, and that helps us carry significance to the rest of our day and from day to day.  Inspiration doesn't just come to us.  We create it and recreate it until it becomes a regular and energizing part of what we do and who we are.

The right morning routine connects us with--and strengthens--everything in life that is more important to us than P/L.  It is difficult to get caught up in frustration over missed trades and losses if we are truly grounded in the things that matter most to us.  And it is difficult to get rich in markets if we're living impoverished lives.

Further Reading: