These day trading practices have the potential to dramatically improve results. Day trading is a mentally engaging process, and these practices are designed to keep us alert and focused, yet relaxed and confident. All key ingredients for trading well and consistently.

The practices discussed below could also be applied to swing trading. The processes are implemented any time we are scanning or could potentially make trades.

While everyone day trades differently, opportunities don’t last long, so day traders must be ready to pounce when opportunities arise, yet also be relaxed and patient enough to wait for those opportunities.

Trading is 99.9%+ an exercise in restraint, not action. I #daytrade for 2 hrs/day (7200 seconds). I click a buy or sell button for maybe 5 seconds total (0.07% of time). The other 99.93% of the time is an opportunity to mess up the strategy.

— Cory Mitchell, CMT (@corymitc) September 17, 2022

There are a few things that get in the way of this ideal trading mind frame (being confident enough to pounce in a split second when the opportunity arises, but being relaxed enough to wait for it).

• Not in the correct Trader Mindset. The trader mindset is the part of ourselves that did all the research on trading and wants to be profitable. It has developed strategies and protocols for trading, but it can easily be thrown out of the driver seat by other parts of ourselves when money is on the line. Our fear, anxiety, greed, perfectionism, laziness, or gambling mentality (and many more parts) don’t go away just because we have a strategy or open our trading platform. And these parts can take over while we’re trading causing all sorts of problems if we don’t have a plan for dealing with it.
  
  
• Expecting something from a trade or for the day. We should test our strategy enough to know it makes money over many trades. All we need to do is follow it, and we can expect profit over many trades. Yet, if we start expecting that we will make money on THIS trade, or that we will make money TODAY, or that the asset has to move a particular direction, we’re setting ourselves up for disappointment and potential trading problems.
  
  
• Not having a morning routine that gets us into our Trader Mindset. Not preparing ourselves adequately for trading is like coming into a game, cold, after sitting on the sidelines. Every day, we are coming in cold. Our mind has been elsewhere else so we need to prime it for trading again. Some days its easy, others not so much. Establish a pre-trade routine to reinforce the Trader Mindset and give yourself the best chance at success. Without a morning routine to re-establish the Trader Mindset, any part of ourselves could be in the control—the perfectionist, the gambler, the worrier, etc..
  
  
• Not talking our way through the price action and what trade scenarios could develop. If we aren’t engaged in the trading, and planning out trades as the price action unfolds, we are likely to be slightly slower than the traders (and computers) that are. We are more likely to enter slightly late, get out slightly late, miss opportunities completely, or take impulsive trades because we haven’t affirmed what we actually should be doing/not doing.

So we have a few things here that can easily cause us not to trade our best (assuming we have a strategy that works). Let’s look at how to handle each of these issues as a way to improve our day trading. I recommend implementing and working on all these areas if you are serious about day trading. Change the words to suit your preference, but adapt the ideas.

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Establish a Dominant Trader Mindset While Day Trading

The market’s movements and our strategies are constantly being filtered through our minds as we trade. If we’re feeling over-confident, over-eager, anxious, greedy, low confidence, and the list goes on, those types of feelings are more likely to cause deviations from our trading plan and result in trading poorly or inconsistently.

We want to keep our “trader” in the driver’s seat of our mind while we trade. We don’t want the gambler, video game player, golfer, parent, accountant, or the anxious part to take over.

These are all examples of parts of ourselves, just like the trader is part of us. But the trader is trained to trade, and the other parts aren’t. They have different agendas and goals, and they’re the voices that tell us to not take trades (scared or doubt), to hold a trade longer than we should (doesn’t like being wrong or is greedy), to get out early (scared), or wants to constantly take trades (active part, gambler, distraction, lack of focus).

I recorded a video about doing a parts negotiation, called Why We Mess Up Trades and What To Do About It. Definitely check out the article/video, but in summary, we need to find a compromise between all the parts of ourselves (if we don’t, we feel conflicted).

For trading, this typically means having a negotiation between our Trader part and other parts that interfere with trading. It sounds kind of stupid, but the process can bring tremendous inner calm because instead of trying to ignore parts of ourselves (which makes the problem worse) we’re actually coming up with solutions and a fix.

Basically, we get our parts to stay out of each other’s business, or to help each other instead of sabotaging each other.

This doesn’t just apply to trading! It is used to find better focus and clarity in all sorts of activities.

No Expectations of RESULTs While Day Trading

We don’t know which trades are doing to work out and which ones aren’t. We can’t know if today is going to be bad or good for the strategy.

If we go into a trade expecting it to be a winner, we may end up holding it longer than we should, for example. Or if we expect the day to be a winner, we may jump into trades early or trade more than we should because of our high hopes.

Take trades as they come. Some win some lose. Take days as they come. Some win some lose.

By having no expectations of results in the short term, we’re better able to realize our strategy’s potential over many trades.

I do have expectations for my trades. I want to see it play out a certain way, and if it doesn’t, I have a plan for that (stop losses, trailing stop loss). But I don’t have an expectation for the result. The market will do what it does, and I just have to do what I do, which is follow my plan.

If we have done our work, we should know how the strategy performs, and we can see that there are winning and losing trades and days, and yet the strategy still produces a profit over the course of a month (for example). There’s no reason to expect certain results out of individual trades or days, just follow the strategy. Come into each day with the focus of remaining calm and implementing the strategy well.

Improve your win rate (days and trades) by working on your strategy and implementation.

Related to this, “pumping ourselves up” for a trade, or trying to ignore a trade that’s stressing us out, means we’re too tied to the result (winning or losing). We’re trying to artificially overcome the possibility that those expectations may not be met. This is a highly stressful way to trade, and also violates some of the other concepts discussed in this article.

Develop a Morning Routine for Solidifying the Trader Mindset While Trading

Before you do strenuous exercise, you typically warm up beforehand. You get those muscles moving and ready for action.

Day trading is a mentally taxing exercise (especially when starting out). Therefore, warming up our mind and getting it into the right midframe is just as important as warming up our bodies for hard physical work.

To do this, I use a morning routine that focuses on a few key components. This whole process only takes about 5 minutes, so it is not time-consuming but is a few minutes very well spent.

• I start by writing down a few positive thoughts that are also centered around “no expectations for today”. Here are a few examples.
  
  • I’m calm and focused. I have no expectations of results for today as the market will provide what it will. The strategy I trade works very well, and I trade it well.
    
    
  • I love trading and trading this strategy. I have no expectations of results from any trade today. I execute my strategy well and am always well compensated by the end of the month. There’s no need for me to interfere with the strategy. I trade it as it was designed.
    
    
  • I am feeling anxious today. I had a brief negotiation telling this Anxious Part that the Trader has developed this strategy to produce profit over time, and that there’s nothing to be concerned about. The Anxious Part was worried the winning streak will soon end. It may. That is part of trading. I affirmed I have no expectations of results today, and I’m ready to trade, following the plan as designed. The market determines whether I make or loss on each trade and each day. My strategy, which I control, determines my profit over the long run. I now feel confident, relaxed, clear, and ready to trade.
    
    
  • I am grateful that I have developed methods I enjoy, that work, and that I get to do this for a living. I show my gratitude by sticking to my strategies so that I can continue to do this and continue to trade well. I have no expectations for today. I will follow the plan, and continue to do what I do well and love.

As you can see from the examples, the words change each day based on whatever I am feeling or dealing with that day. Take a least a couple of minutes to affirm the positive intention of following your strategy coupled with no expectations (of the result) for individual trades.

• Next, I review my strategies/trading plan. I have a one-page summary of my day trading strategies next to me all the time while I trade. I look through each of the patterns, noting when it can be traded and when it can’t be.
  
  
• I then visualize a short and long trade for each of the strategies. I see myself entering and exiting the trades. Planning as it approaches, and pouncing with the correct entry, stop loss, profit target, and position size.
  I also visualize holding through some turbulence as the price moves from my entry to my profit target or stop loss. I stick to my strategy regardless of the wonky movements that occur while I’m in the trade.
  
  
• If I am feeling a little “blah”, at any time before I start trading, I hold my hands above my head for one to two minutes like I just won a race. Sounds ridiculous, I know, but it has actually been proven to decrease cortisol levels and increase testosterone…which will result in elevating that “blah” mood to a calmer and more in control Trader Mindset.

Talk Your Way Through the Price Action So You Know Exactly How to Act and When

You have a strategy, but maybe you keep missing trades, or jumping into impulsive trades. This could be because you’re not tracking the price action as it moves. The problem can also be magnified if you trade multiple strategies (like I do) because now you have more to think about, and that thinking takes time and energy.

Assume the price is nearing a potential trade setup. Possibly your strategy is largely automated, but if it isn’t, you need to locate where to place the stop loss, where the potential entry will be, where the target will be. If all these are reasonable based on the context, then you need to calculate the position size if you use a “account risk %” (not required if using a fixed position size).

As the price moves, consider:

• What trade setups could occur based on the recent movement? That way you are ready for them.
  
  
• Is the context correct for the strategy? Is there enough movement, and does it align with the strategy parameters so far?
  
  
• What is the overall trend and how far are price-waves typically running? What’s the profit target based on this? If the target for the trade likely to be hit based on the movement of the asset?
  
  
• What would cause a reversal?
  
  
• What would invalidate the strategy from setting up?
  
  
• As the trade gets close to setting up, is the stop loss distance acceptable for the overall movement? If not, no trade, or wait for a better opportunity.
  
  
• Where is the entry point or what is the trade trigger to get into the trade? What order type will be used to enter the trade?
  
  
• Is the target likely to be reached? If not, is a modification possible? A smaller target? Or wait for a smaller stop loss which will allow for a higher reward:risk even on a smaller target? Or is a trailing stop loss going to be used?
  
  
• What is the position size based on the stop loss?
  
  
• Based on context and your strategy, can you exit early for any reason (what reason?) or must you hold till the price hits the stop loss or target?
  
  
• WHEN THERE ARE NO TRADES CLOSE TO SETTING UP, then discuss what would have to happen for a trade to occur. This helps avoid impulsive trades. While waiting you can also go over some of the bullet points related to context, trend, movement, etc.

It doesn’t really matter how you talk yourself through the price action, because it could vary based on trading style. What does matter is always preparing your mind for action when action is close at hand, but also preparing your mind for when a trade becomes invalid or no opportunities are currently present. By doing this, you already know what you’re doing to do before it happens. You’re in control of your actions and thinking process, instead of being reactive and impulsive.

There’s also another benefit of constantly talking yourself through the price action. When your mind is engaged in constantly assessing the price action, THERE IS WAY LESS ROOM IN YOUR MIND TO BE WORRIED, ANXIOUS, GREEDY, OR GET TOO FOCUSED ON RESULTS. As feelings arise, or we lose focus, just gently bring yourself back to analyzing the price action and preparing for possible trades (or talking about why there aren’t trading opportunities right now).

We all get distracted and lose focus, so be gentle with yourself. When you notice you have stopped talking yourself through the price action, just bring yourself back, even if you don’t want to. It’s mentally taxing, but the mind is like a muscle, and the more we do this, the easier it is to say focused and the better we will trade.

“Commentating” is discussed more indepth in this article.

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Final Word on Practices to Improve Day Trading Performance

To me, these things are the Holy Grail of trading. A strategy means absolutely nothing if we don’t follow it because our mind isn’t in the right place or is doing the wrong things.

Implement these tools as much as possible. Make them a habit, and let me know in the comments if they helped you out. Or, if you have other practices that help your trading, share them in the comments.

By Cory Mitchell, CMT

Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.