I was reading one of your recent posts on how you go about your business throughout the day by paying attention to the news and info. flow. My question is how much you are tied down to the screen with regards to paying full attention to the info. flow….i mean, are you watching every bit of news as it comes out on, say, Oanda’s FX News platform (I’m thinking not), or do you just occasionally check in (say, every half hour or so) and see what is coming across on the newswires? Just curious how much is too much for reading news as it comes out and how much is too little.
Here is how I think about it:
The bare minimum is usually wake up sometime between 4am – 7 am EST. Immediately check the charts, information flow and price alerts, scenarios, to see if a trade is setting up using all the knowledge and macro model information I had from yesterday’s habits. Check on existing trades to see if I want to take profit or cut the loss, or add to the position, etc. I try to do that as fast as possible, sometimes it just takes a few minutes.
After that initial step is done, then I spend 1-2 hours doing the daily habits. Marking off the stop levels, barriers and setting price alerts, recording the news impacts, snippets of news, etc that were released during the earlier European session. I try to do whatever I can up to that point of the day.
Sometimes, with that additional information and insight I get, I can find a new trade, or modify an existing one, etc. Sometimes I still don’t see anything, so I don’t do anything.
Then it depends on if I want to trade and analyze the market for the whole day or not. If not, then I can just come back sometimes after Noon(12pm) towards the end of day, and do another 1-2 hours of updating and finishing the habits, doing the correlation/sensitivity sheet, recording news, etc.
Sometimes, with that additional information I get, I can find a new trade, or modify an existing one, etc. Sometimes I still don’t see anything, so I don’t do anything.
Now, if I choose the trade and analyze the market for the whole day approach, then typically after the 2 hours doing the habits from the start of the day, I will try to go into a bit deeper analysis of the currency markets. Checking a bit deeper into the information flow and scenarios to make sure I got them right and seeing what has moved the market in the near past, and what it is currently pricing in. Maybe read more articles, etc.
I can try to analyze more markets, such as the futures markets like S&P, crude, bonds, etc. If I still can’t find anything in those, then I can choose to start analyzing some individual stocks. Labeling some stop levels and price alerts on key stocks that I am following. Developing scenario sheets for new stocks that I think are interesting. Checking up on today’s and yesterday’s stock moving news and playing out the scenarios from the current moment. Seeing if I see any opportunities to “Go with the move”, “Fade the move” or “Do nothing.”
Throughout this time I am occasionally checking up on the information flow, it could be from Oanda’s FX News platform. It could be every half hour or every hour. I am interpreting any price alerts that got triggered and seeing if they have any meaning and if I can place a trade. Then I reset the price alert to the next nearest stop loss location. Ex – Lets say the GBP/USD on Friday, September 13, 2013. I would have had a price alert at the 1.5850 barrier. When that got breached, I reset the topside alert to 1.5900
Sometimes if a price alert is breached I check to see if anything in the information flow and scenarios has changed to warrant it.
If there is a special news release, then I try to watch that and trade it if appropriate.
Here are my ideas of the “extra things” you can do during the day, in addition to regular habits to try to perform better, etc. It helps answer the question: What else can I do?
- Analyzing and doing the habits and scenario sheets and interpreting information flow for other markets like futures, commodities, individual stocks, etc.
- Watching the price move up and down, playing out intraday scenarios in your head (kind of like tape reading, but more playing out the battle of scenarios in your head)
- Conversations with other traders and people that have great insight that you believe you can use.
- Reading various trading books and articles that I deem important and relevant to my development. (there is always more to learn about trading)
- Reading some personal development books or spirituality books. (I do think that once you have developed sufficient proficiency and mastery in trading, spirituality and personal development can help you take your life to a higher level in terms of happiness and profits, etc) (Ray Dalio talks about how he does Transcendental Meditation)
- Create your own list of extra actions you can do that you find valuable and can take you to where you want to go!
In the beginning I probably was fanatical about following the news feed every second and minute to see if I could spot an opportunity to jump on the information and get in 1 minute before other people. That was probably because I had an insufficient development of market beliefs. I probably believed that it was important to have a speed and information edge over other traders. And there are such inefficiencies where you jump on information a few seconds faster or a few minutes faster than other people. There are certainly those types of trades to be had during the day. (some news spike traders are stuck in this world, when in reality, they would be better moving towards a more interpretation advantage type of inefficiency)
It’s just that the majority of a trader’s profits, are probably going to come from swing trades, that last a few days or few weeks, etc.
Unless you have a small account or a small side account, where you are leveraging heavily to capture the intraday inefficiencies. In that case then the intraday speed of information flow can be important.
There is a different kind of edge that I have been slowly moving to and that I tried to explain in the Mastery Course. The edge of having an interpretation advantage. Where you can interpret the right information, in the right way, at the appropriate time. You can see the same information as other people, but have clearer insight into how things will play out. You can’t do it every second or every minute or every day. But over the course of several days, weeks, and months, that edge can play out.
You can review this lesson for some further clarity about the difference between speed of information advantage, vs interpretation advantage: http://orderflowforex.com/information-flow/
As George Soros was describing himself:
I remember looking at myself with awe, amazed at the speed with which I could react, the wealth of information I could draw on, and the analogies I would apply. I was on top of every situation, I was able to establish connections that were not readily visible to others.
Jack Schwager describes Stuart Walton’s edge:
Most great traders have some special skill or ability. Walton’s talent lies in not only observing the same news and information as everyone else, but also in having a clearer insight into the broad market’s probably direction – sometimes to the point where the markets future trend appears obvious to him.
Jack Schwager said of Steve Cohen:
Another thing I noticed about Steve that I’ve also seen in a number of other great traders is that he can look at the same one hundred facts everyone else sees – some of which are bullish and some of which are bearish – and somehow pick out the one or two elements that are the most relevant to the market at that moment in time.
Sometimes traders can get frustrated, because they tell themselves, that if they just got the information 1 minute faster, they could have placed a faster trade and taking advantage of the opportunity, but they didn’t get the information fast enough and they missed the opportunity and they are kicking themselves.
You can combat this by realizing that the past is the past and you can’t change what happened. And by realizing that most of the great trades of the past were not just get in one minute , get out 5 min later. Those inefficiencies obviously exist, as I talked about with the intraday news trade types of inefficiencies. But most of the great trades, you had multiple opportunities to get in, whether you had that extra 10 minutes, that extra 1 hour, that extra day, that extra week, etc. Because they were MDMM or GM moves.