Daily Trading Routine: A Day in the Life of a Day Trader

One of the most popular trading styles among forex traders is day trading. Day trading revolves around trading news releases and watching short-term price movements caused by technical levels. That’s why a day trader needs to actively monitor the markets and manage their trades. Finding trade opportunities throughout the day and placing orders requires preparation, dedication and time.

Day traders use fundamental and technical analysis as well as keep a disciplined trading routine so they can make the most of short-term price movements.

Remaining vigilant, closely watching price charts or using pending orders to grasp opportunities whenever they arise, can make day trading very demanding.

Many traders start their preparation the previous day by finding market-moving economic releases in an Calendário Económico and identifying potential trade setups on a chart. Before we take a look at a day trader’s daily routine, it may be useful to first discuss what is involved in day trading.

O que é o day trading?

Day traders buy and sell trading instruments with the goal of profiting from price changes. They may hold trades during the day and close them by the end of the day, or keep them overnight. Because of the short period of time, traders need to keep an eye on the markets and actively manage their trades.

The Nature of day trading and Psychology

Due to the nature of day trading, a trader needs to have certain traits. Day trading requires traders to invest considerable time, keep up-to-date with trends and be present throughout the day, checking their charts and reading news.

This means you need to be disciplined and organised, patient and critical, making the right decisions without making impulsive moves.

Being aware of market news

While market news and information are everywhere and everyone online could express their opinion, you would need to sift through all the news and make critical decisions.

Confirming a trading setup

At the same time, being patient and waiting for a trade setup to confirm is paramount. Identify areas of buying or selling pressure, identify the trend and then check your chart and candlestick patterns. Finally, use indicator signals to confirm what the first four steps have shown you or to notice something you have missed. With these 5 steps, you’ll be assured that the various aspects of trade have been checked. You will also be able to weigh both sides of a trade and choose the best possible direction based on your analysis and evidence.

Day trading toolset

Day traders follow different routines and use a wide range of tools or practices to help them trade better. Having a solid risk management plan in place helps traders deal with market volatility and reduce potential losses. The standard rule of trading is risking only a small percentage of your trading account, around 2-3% on a trade.

Apart from risk management, traders tend to keep a trading journal where they can enter the most profitable trades or any mistakes they made. Being able to return to your past trades and revisit them from a more objective perspective will help you learn from past mistakes and repeat trade strategies that have worked.

From a technical analysis perspective, day traders utilise trendlines, support and resistance levels and chart patterns, among others.

From a fundamental analysis perspective, they monitor the markets so they are ready when important releases are out. GDP numbers, CPI (inflation) rates, jobs data, PMI data and other key releases and reports, together with central bank announcements are part of a day trader’s most closely watched data.  Additionally, geopolitical events can have a great influence on the forex market, so traders must also be mindful of news from around the world. Depending on what currency pairs you are trading, keeping a close eye on the respective countries of those currency pairs is essential.

Day trading daily routine

A day in the life of a day trader begins with checking the news and ends with making plans for the next trading day.

Checking market news

Day traders begin their day by checking any movements that have occurred during the night and scan the markets for any news that caused volatility. By scanning and reading the news on a daily basis, day traders build a solid understanding of the markets and market sentiment. They become more confident in their ability to detect the right trades, recognise opportune moments and act on them.

Scanning price charts

Finding potential trade opportunities for the day ahead also involves reading the charts, identifying important technical levels and entering trades at the right time.

Executing trades

Once you have found a few tradeable setups, you can go ahead and execute the trades. Ensure you have a risk management plan in place and that your position size does not exceed your limits. Day traders may use pending orders if a breakout has not occurred yet or buy-stop orders in the case of a possible breakout to the upside. A sell-stop order may be placed if there is a potential breakout to the downside.

Managing trades

After executing the trades, you need to be vigilant and monitor them. If a trade doesn’t perform as expected, you can go ahead and close it. Check the news and remain alert. High volatility can happen at any moment, so you need to be aware of market news at all times. A market release could affect your ongoing trade, so you need to know what is happening in the markets.

Closing active trades at the end of the day

By the end of the trading, day traders tend to close all their trades. Sometimes, you may close trades and make profits and at other times incur losses. This is part of trading and having realistic expectations will help you stay focused in the long run.

Plans for the next trading day

Day traders are always on the lookout for potential trades and may have already found some trading setups they want to pursue the following day. Keeping an eye on such potential setups and being prepared is a sign of a well-organised day trader. With the help of an economic calendar, they can identify highly-influential events and news and they can arrange their trades around them.

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