5 Rules for Better Time Management
Managing your time is no less important than managing your risks. As I said on the Time Management article last week (Click Here for the last Article), part time traders usually has a limited time to trade, it might be on the morning before work, on the afternoon or at night. On binary options trading a trader can trade 24 hours a day, it means that everyone can found a sufficient amount of time to trade, nevertheless, this time is limited for a few hours only. This brings me to the first step of time management: Setting up trading times.
1.Establish a specific time to trade daily
That’s the most important part of time management. There are two variables to consider when setting your trading hours.
A. Setting Trading Hours – and only your free time could become your trading time. Trading demands focus, especially when trading in short time frames. You can’t help your child with their homework’s while trading. That will be gambling. Ask yourself: what time do I finish work? What do I usually do after? Don’t just delay other tasks because you want to trade. Consider trading as a task, a daily after work job. If you say “I’ll trade between 8pm-11pm” than those hours will be your trading hours. Don’t do anything else expect trading while trading; make sure to complete your other tasks before and after trading time. Consistency is key.
B. Global but Local – A trader from Europe can trade at noon, both on the U.S markets and Asian. A Japanese trader, can only trade on the American markets at night time. So wherever you’re based, you need to understand that you cannot trade on all markets all day. You must focus on markets working on your trading hours; limit yourself for a few assets and indices available to trade on your trading hours. Specialize on these markets. Market opening/closing on your trading times could provide great opportunities.
2. After setting up trading hours, adjust your everyday tasks so they’ll fit your trading plans.
Let’s say you’ve decided to trade between 18-21. Whatever the tasks you have, you must not let interfere with your trading hours. Finish every task before or after trading hours. When you have a new assignment, something that came by surprise, try and do it on your off trading hours. No matter what it is, unless it’s something really important which has be done immediately, don’t let it interfere with your trading hours. Your trading hours are no less important than your working hours. Trading is working, a profession, not just a hobby.
3. Now that you’ve organized your day so nothing will interfere with your trading hours, it’s time to prepare for trading.
Before you dive into your computer, exercise a little, pump some blood into brain. I usually stretch and make some pushups, some people go for a run, some by a punching bag, and others lift weight. Whatever you’ve got to do to make your blood flow, do it. It’s important to be 100% focused before trading, good fitness could help a lot. 5-15 minutes of exercise before trading is all you need, so make sure to include it in your trading hour’s schedule.
4. Trading Specialization – the positive side effect of limited trading hours.
The problem with time is the lack of it. We only have certain windows for trading during our day, and unfortunately, not all financial markets are opened while we trade. On the one hand, we can’t trade all indices and stocks. We are losing opportunities. From the other hand, we could become much more specialized on a few chosen assets. I call it “the positive effect of limited trading hours”. Most people don’t understand that lesser variety is actually better then lots of assets to choose between. When you’ve decided to trade between 5pm-8pm, you know the assets available to trade on those hours, so now you can focus on them. More specializing = more profits.
5. When your trading hours have passed, call it a day.
The most important rule of any real trader is setting trading limits, both for profits and losses. One common mistake done by newbies is to underestimate the market, losing more than you wanted or losing after winning streak. When on losing streak, beginners tend to believe that their luck would change at a certain point; therefore they should keep on trading to make up for their losses. The same for winning streaks – if I’m on a roll, then maybe I should keep on trading. Then you lose, and lose some more after trying to gain back your used-to-be-profits. There is a simple solution to this disease – setting goals for profits and limits for losing. Your goals should fit you trading level of course – if you’re a newbie, set a daily goal of 1-4% profits (% of the user’s account total value). When you’ve reached your goal, stop trading. Call it a day, look for something else to do, maybe some exercise. A 1% daily profit (5 days a week) equals 5% weekly profits, which sums to a yield of 22% per month. Pretty good for 1% a day isn’t it? If you had invested 500$, within a month you’ll gain a profit of 110$. 5% daily, for example, is a 165% yield in just one month.
After setting your profits limit, don’t forget about stop losing limits. Don’t take luck as an actual factor when trading. That’s casino thinking. Set your limits for losing, when you’ve lost more than your limits, stop trading. No good will come from trying to cover your losses, you’ll only loss more.
Every trading day should stand by itself. If you’ve lost yesterday, don’t try to regain your losses today. Keep up with your plans, if your goal is 5% daily, reach 5% than stop. Even if you’ve already lost 4 days in a raw, stick to your limits. When the end month comes, calculate your losses and profits and think of a new trading plan. For example, I know a few traders that increase the losses limit (say from 5% to 6% loss) after achieving their monthly goals. This allows them another 1% trading volume, better chance to regain their losses. No matter what your trading plan is, stick by it. Change your trading plan only after a few months trading.
Another important rule of trading limits – never continue trading after your trading hours have passed. If you plan to trade between 8-11, stop at eleven, no matter what’s your position. You might not notice it in your everyday life, but our body and brain adapt to our habits. Some of us are hungry at noon, tired at night or full of energy at morning, that’s just our bio system. When we trade on specific hours every day, our brain and body would adjust themselves to the situation, allowing us more efficiency and concentration while trading. When the time is up, we might not notice it immediately, but our body functions would decline, causing us stupid mistakes and losses.
6. Think about tomorrow
Most traders find it very hard to stop trading, even if they have other important things to do or just feeling tired. As much as it’s hard to just stop trading suddenly, it’s necessary. Not stopping trading as I explained in step number 5 is nothing but a receipt to self destruction. Nevertheless, there is one way of keeping trading without trading – thinking about tomorrow’s trading! After your trading hours are through, take a deep breath, empty your mind for 5 minutes. Release your thoughts of today’s trading and start thinking about tomorrow. Check out financial news, try to expect future breakthroughs, special events, look for anything that might be your next day’s opportunities. Write down the hours and expected effect of these possible trades; make yourself a list of opportunities. Take that list with you; carry it on you for the rest of the day. Whenever you sit on your computer, see if there’s anything about it. Then, when the trading window opens, you’re already equipped with enough information to make the right choice. Some traders take up to an hour reviewing financial news, some 15 minutes, it’s up to you. Don’t forget to include this time on your total trading hours.