5. Beyond Trading Hours

Besides trading routines, there are some tasks which can and should be done while away from the market. Novice traders spend usually too much time in front of the charts while experienced traders take that time to enhance their skills. Here are some tips on the activities you can undertake.

Do Exercise

Are you willing to do 30 minutes of exercise before the trading session begins to relax and clear your mind? It is known that physical exercise interrupts negative and/or recurrent patterns of thought. Because so many negative behavior patterns are triggered by states of frustration, heading off these states by proactively engaging in this exercise is especially effective. Here are some suggestions from Don Dawson:

It is not uncommon to feel a little excitement while you are in a trade. This is normal for people who enjoy what they are doing. The key is to not al low the excitement to creep into our physical body and cause us to tense up during trading. Once we get to the state of physical tension, then our emotions will come storming in. Remain as relaxed as possible by doing some breathing exercises, making sure to take deep breaths and not shallow ones that will create stress. If you feel this physical tension coming on, stand up and stretch some. Sitting for long periods of time allows our blood to pool in the wrong places causing the brain not to get the blood needed to function properly.


How will you overcome the emotional swings between fear and excitement and their influences on your performance? This element may be more important than it seems at first glance. Positive thoughts and envisioning yourself as a great trader will not do it alone- you need additional resources to gain awareness of your emotional states and to train yourself in interrupting certain emotional states before they damage your trading account. Meditation practices acquired through Tai Chi Chuan or Yoga are already benefiting a lot of traders.


It is critical to backtest your ideas when you are not wrapped up in the fear of losing money or in the greed of making money. These emotional spirals are what keeps you from making money in the first place.

Many people who dislike backtesting have never done it. Why don't you just try and do it for 30 minute a week and keep gradually increasing the amount of time until you adopt it as a daily task? There are things a trader can only learn and discover when testing historical data. The acceleration of data processing in backtesting is critical to detect certain things that your mind will not detect when trading in real time.

Have you already backtested the system explained in Chapter C01? If not, in Practice Chapter C, we have shown you five years of backtesting results and a multimedia module showing many of the 300 trades comprising the test. The trade log is recorded on a spreadsheet you can download and use to process your own trades into dozens of statistical figures.

Develop Powerful Habits

Creating powerful habits is one of the keystones to the making of a successful trading plan. One powerful habit is to record all the questions and their answers that come to you and incorporate them into a written trading plan the way we have been suggesting. When you do not have a written plan, even though you have developed a plan, it is too easy to drift away and go back to old habits. Writing your trading Plan down provides you with something tangible. Most novice traders know what has to be done in order to achieve consistency in trading, but only a few are aware of what they want to do.

A written plan also helps in recognizing your bad habits and sustaining the awareness to change them. The structure of change seems to be remarkably consistent. First the bad habits have to be recognized:; it is not possible to change a bad habit unless you can recognize its appearance in real time. This is the reason traders keep journals in which they observe situations that trigger problematic patterns and the consequences of those patterns. For example, if your equity grows to a certain amount, it triggers in you a feeling of overconfidence and the consequence is usually an increasing of the position size.

Once the bad habit is recognized, it has to be interrupted. Have a plan in place  is better than not knowing what to do when a certain bad habit is detected. For example, if your pattern is one of fear of loss after experimenting a new drawdown, you can chose to demo trade for the next session in order to regain confidence.

After interrupting a bad habit, it is necessary to substitute it with an effective one. The goal is to couple the triggers of the old bad habits with new, more constructive responses. Use your imagination and visualization to develop new powerful habits. The first attempts may require a lot of motivation and strength, but the most important aspect to make it work is the repetition of the whole process.

Many novice traders think it is their job to wake up each day and trade. The astute trader knows that every trading day offers them an opportunity to repeat old mistakes or to make changes upon them. Wayne McDonnel explains how he dealt with this reality:

No one was “born to trade”. No one can be a perfect trader, but you can try. Because I had no one to coach me and teach me how to trade forex successfully, I had to create the perfect trader and make that mythical trader my trading coach. My idea was to identify what characteristics a perfect trader would have and pretend I could live up to those standards. My goal was to keep pretending until I forgot I was pretending. My energy was then focused on developing positive trading habits and not on making money. It changed my entire outlook on forex.
Source: FX Bootcamp's Guide To Strategic And Tactical Forex Trading”, Wayne McDonell, Wiley trading, pag. 193

Personal Development

Make this area a priority and it will put you ahead of others in the long run. Van Tharp suggests to transform at least five aspects of our personality:

Work on yourself and your personal issues so they do not get in the way of your trading. This step must be accomplished first. Otherwise, it will interferewith each of the other steps. [It] is so important because everything you do is shaped by your beliefs – in fact, your reality is basically shaped by your beliefs. What is a belief? Every sentence I have written (including this one) reflects my beliefs. Every sentence that comes out of your mouth reflects your beliefs and your beliefs shape your reality. Who you think you are is shaped by your beliefs. Who you are is shaped by your beliefs about yourself. In addition, you do not trade the markets. Instead, you trade your beliefs about the market. One of the key aspects of working on yourself is to examine most of your beliefs to determine if they are useful. If they are not useful, then find beliefs that are more useful. This is one of the key aspects to working on yourself. You probably will never be free of limiting beliefs and some aspects of self sabotage during your lifetime, but I consider this step to be complete when you transform about five very limiting aspects of your life and you feel very different about each. Once you have accomplished five such transformations, then I consider you capable of generally overcoming future roadblocks that might come up in your trading.

Invest In Other Areas Of Your Life

Be sure to keep your life in balance while trying to accomplish your goals in the trading world. Your family, your friends, your job or anything you like to do, make sure you do not abandon them while you try to put the trading puzzle together. You will soon start to learn big trading lessons in areas where you never thought you would learn something related to trading, but it will happen. You mind is now prepared to reach a goal, and it will find clues everywhere, up to a point that you might learn more outside of your charts than looking at them.

You may have to remove certain things from your life to gain focus in your trading endeavors, but make sure these are not vital parts of your person- this would deplete you emotionally and create an unbalanced situation.

Are you giving yourself what you really need? Most of the time we hear from traders they wanted to become traders to have more time for their family, more time for themselves, maybe to learn something new, or to have that extra time they needed. But in most cases becoming a trader does not change too much one's circumstances in terms of free time. Do not keep yourself from doing other things you like or spending time with people just because of trading. That would be contradictory in the first place.

Just when you know you have everything covered to start your trading career or to continue the one you already have started, you find you have a few more questions you would like to have answered. Feel free to ask them at the LC Forum.
What you have learned from this chapter:

  • The probabilities of success are very much conditioned by the existence of a Trading Plan.
  •  If you do not have a plan, you may confuse luck with knowledge.
  • A Trading Plan is comprised of several areas, and it is an ongoing process.
  • A Trading Plan has to suit your circumstances and your personality.
  • A Trading Plan helps you identify and accept your own personal and psychological obstacles in trading.
  • A Trading Plan helps you develop into being a disciplined trader.