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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 for 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 enough wait for those opportunities.

There are a few things that get in the way of being confident and relaxed enough to wait, but also being confident and ready to pounce when a trade signal occurs:

• Not being 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 more emotional parts of ourselves when money is on the line. Our fear, anxiety, greed, perfectionism, laziness, or gambling mentality (and many other parts) don’t go away just because we have a strategy. And these parts can take over while we are trading and cause 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, we are 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, 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 re-establish the trader mindset, any part could be in the control—the perfectionist, the gambler, 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 or 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 does work). 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.

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 are feeling over-confident, over-eager, anxious, greedy, low confidence, etc., 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.

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 are the voices that tell us to not take trades (scared or doubt), or to hold a trade longer than we should (doesn’t like being wrong or is greedy), or to get out early (scared), or wants to constantly take trades (active part, gambler, distraction, lack of focus).

I wrote an article about doing a parts negotiation, called Why We Mess Up Trades and What To Do About It. In summary, we need to find out what those voices/parts want and what their positive intent is so we can hold a negotiation between each voice/part and the trader. This doesn’t just apply to trading. It is used to find better focus and clarity in all sorts of activities.

No Expectations While Day Trading

We don’t know which trades are going 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.

Expect nothing from each trade or from individual days. Take trades as they come. Some win, some lose. By having no expectations in the short-term, we are better able to realize our strategy’s potential over many trades.

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). So there is no reason to expect anything 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.

Related to this, “pumping ourselves up” for a trade, or tying to ignore a trade that is stressing us out, means we have strong expectations and are tying 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 text.

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 taxing mental exercise (especially when starting out). Therefore, warming up our mind and getting it into the right state 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 five minutes, so it is not time-consuming, but is a few minutes well spent.

1. I start by writing down a few positive thoughts that are also centered around “no expectations for today."

• I am calm and focused. I have no expectations for today, as the market will provide what it will. The strategy I trade with works very well, and I perform it well.
• I am feeling anxious today. The anxious side of myself is worried my winning streak will soon end. It may. That is part of trading. I affirmed that I have no expectations today, and I am ready to trade, following the plan as designed. The market determines whether I win or lose on each trade. 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, 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.

As you can see from the examples, the words change each day based on whatever we are 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 for individual trades.

2. Next, I review my strategies/trading plan. I have a one-page summary of my day trading strategies next to me while I trade. I look through each of the patterns, noting when it can be traded and when it can’t be.
3. 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.
4. 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 unsettling movements that occur while I am in the trade.
5. If I am feeling a little uncertain 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, which will result in elevating that low mood to a calmer and more controlled state.

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 planning 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 located where to place the stop loss, where the potential entry will be, and/or 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?
• 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-moves typically running? 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?
• 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 should you 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?

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 when action is close at hand, but also preparing your mind for when a trade becomes invalid or no opportunities are currently present. You essentially already know what you are going to do before it happens. You are in control of your actions and thinking process, instead of being reactive and impulsive.

There is also another benefit of constantly talking yourself through the price action. When your mind is engaged in constantly assessing the price action, there is less room to be worried, anxious, or greedy. As feelings arise, gently bring yourself back to analyzing the price action and preparing for possible trades.

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 is 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.

Final Word on Practices to Improve Day Trading Performance

To me, these things are the Holy Grail of trading. A strategy does take some time to come up, but a strategy means absolutely nothing we don’t follow it because our mind isn’t in the right place.