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7:00 am — Coffee
It’s Monday finally. Weekends are boring; markets are closed. Europe opens in an hour. No breakfast, though. I’m on keto. It’s improving my energy levels and concentration which is perfect for a trader. One cup of coffee and I’m ready to go.
7:05 am — Morning Prep
I force myself to avoid the headlines. That’s old news. I’ll lose money if I react to the present. Instead, I need to predict the future, so I fire up my secret weapon: FinTwit: An isolated but open community on Twitter. There’s no hidden entrance. All you need to do is follow a few smart, successful finance professionals — say, Raoul Pal, Danielle DiMartino Booth, Grant Williams, etc. — and Twitter’s recommender system grants you an all-access pass. I’ve built a wealth of information from reliable sources in no time. Who needs an economics degree in 2020? I don’t. I have Twitter.
Next, I’ll update my watchlist based on any news flow that’s been released over the past 24 hours. Redundant trade ideas are binned. No remorse, no feelings, it’s all about being unemotional. Likewise, trade ideas that are working, I’ll consider.
After that, I’ll check for the latest leading economic data available online, for free, via Trading Economics: my go-to website showing me everything I need to know from U.S housing data to Chinese business confidence. Using this, I’ll update my predictive models for growth, inflation, sentiment, liquidity, and policy response. The five key drivers I need to anticipate to have any chance of both beating the market and making money.
7:50 am — European Premarket
I open my trading platform and check any live commodity or live currency positions that have been trading overnight. Everything’s fine. Another day, another sigh of relief. If I have any positions I want to put on, I’ll do the math needed — stop-losses, take-profits, risk-reward, etc. But today, all I’m doing is taking profits in some of my European shorts.
At 8:00 am exactly, European markets open and my computer screen lights up. The most important thing, however, is to avoid wasting time staring at charts for too long. Technicals are nothing without understanding the fundamentals behind them.
9:00 am — Downtime
Although the European market is open, the real market open is in the U.S, but that’s six and a half hours away. So it’s time to unwind—sort of — and focus on other things.
Maybe I’ll study. I’m on chapter six of Mandelbrot’s Misbehavior of Markets. I’m improving how I and many other traders think about risk in modern markets. Simultaneously, I’m on chapter seven of Aftermath by Jim Rickards, highlighting the importance of a backup plan when things go wrong.
Maybe I’ll browse Medium and read great stories from great writers like Niklas Göke, Jessica Wildfire, Tom Kuegler, and more.
Maybe I’ll write. Only for a couple of hours to switch off from markets.
12:00 pm — Lunch
I’m on a ketonic diet plus intermittent fasting. I’ve fasted for 18 hours, so now it’s time to feed. 2000 calories in five hours? Challenge accepted. I start with meal one: four eggs, three bacon strips, one avocado, and one block of cheddar cheese — all organic. All this is to keep me satiated. Hunger is a distraction.
1:00 pm — Prepare For the U.S Market Open
I remind myself of the main drivers of asset price movements: growth, inflation, policy, and sentiment. I have a model for each that I’ve created over many years, but I’m always changing it and fine-tuning it. Markets change all the time and you have to change with it.
First, I open Bloomberg checking sector performance to see what the market is buying and selling on any given day. Then it’s time to check the market’s internals: sentiment, volatility, the volatility of volatility, and volume. This confirms or denies whether the intraday market trend is strong or weak. Something is wrong though: the market is up 2.5% on high volatility and low volume — a good opportunity to put on shorts I’ve had on my watchlist.
2:30 pm — The U.S Market Open
Now, I make changes to any active positions, adding new trades when the timing is right, adding hedges to lock in profits or to manage risk, and trading out of any stop losses. I usually change my portfolio about ten to twenty times a month depending on market volatility. Less volatility equals less opportunity.
Two minutes into the open and I’ve completed all the necessary trades for the day, and since I’ve been hard at work for a good five hours, I give myself some time to procrastinate. Usually, I play around on Twitter, mess around with charts and data, or just stare at TradingView for inspiration.
4:30 pm — European Market Close
At the closing bell, markets go quiet. The gap between the European market close and the U.S market close has the lowest trading volume, so it’s mealtime: 7 cups of salad, a piece of organic meat or fish, celery sticks, and peanut butter — and maybe a slab or two of dark chocolate just to keep me sane.
By now, the world has published most of its economic data. So, once again, it’s time to update my models. It’s a lot of work, but if you thought trading was easy, think again. Those guys on YouTube sitting on a beach, sipping a pina colada with a laptop, offering you a secret formula for $2,000, aren’t the real deal. Avoid at all costs.
5:00 pm — Market Research
Now that markets remain in limbo, the real hard work begins. If you’re going to be a successful trader, you’ll need to create fresh ideas daily. This is the hard part: I have to think about where the market is heading and how each asset class will perform. Testing yesterday’s thoughts gives me a fresh perspective today.
The outcome is a list of assets I’m bullish and bearish on — the following is a simplified example.
Bullish: Gold, silver, U.S dollars, government bonds.
Bearish: Stocks, copper, oil, euros, corporate bonds.
When it comes to particular assets within classes such as a particular stock or commodity, I’ll create a couple of ideas around those and add them to my watchlist.
Here’s an extract from today’s research notes:
Will the Saudi-Russia oil price war kickstart the new bull market in tankers?
The Fed rescued $LQD, but the ETF component companies have barely any earnings? A possible short in the future.
Is this really a bear market rally, or the start of another Fed-induced bull market?
Copper, oil, and other commodities lead stock market moves. Are we due for another leg down?
8:30 pm — Prepare For the U.S Market Close
Suddenly, in the last half hour, markets come alive. Most of the daily trading volume occurs now as people take profits and decide whether to leave on risk overnight or over the weekend. All I do is close out any positions that reach my stop loss or reach my profit targets.
9:00 pm – U.S Market Close
Now, it’s time to switch off from the markets for the day, but the learning has only just begun. If I’m bored with Netflix originals, I’ll turn on the “Netflix of Finance”, Realvision, watching one of the hour-long interviews with one of the greatest thinkers. Today, it’s an interview with Brent Johnson where he explains his Dollar Milkshake theory. After that, it’s a lecture from 1994 by legendary investor Peter Lynch. There’s so much information out there for free.
12:00 am — Asia Futures Open
Although I rarely trade Asian markets (I bought some shares in Nintendo once), I can’t help but turn on Bloomberg and see what the futures are doing. I never really switch off from the markets — it’s a trader thing.
12:30 am — Bedtime
You caught me on a bad day. All this work and I’m down -0.8%. Sometimes you win, sometimes you lose, but that’s part of the game. I’m sticking to my process that’s earnt me 9.7% this month alone.
My Headspace subscription isn’t enough to get me to sleep after an action-packed day. Sleeping pills, however, are my savior. One last check of the futures won’t hurt before I jam my laptop shut. “Must resist the urge to check the futures,” I think to myself ten minutes later as I’m falling sound asleep.
7:00 am — The Next Morning
It’s a new day, but the same-old-same-old. Time to repeat the process.
The views represented in this commentary are those of its author and do not reflect the opinion of Traders Magazine, Markets Media Group or its staff. Traders Magazine welcomes reader feedback on this column and on all issues relevant to the institutional trading community.