Do You Have A "Pre-Shot Routine" For Your Trading?

A couple things happened today that made me think about the concept of a "pre-shot routine" in trading.

First, I received a question about the post I sent out yesterday about resilience being one of the most important traits a trader can possess.

The writer of the question basically said they agreed with the premise that resiliency was crucial to trading success, but they asked how it could be taught.

I'll give you my thoughts on this in a moment, but let me tell you about the other thing that happened today that relates to this...

I'll often put on some music or sometimes the TV in the background when I'm trading. Today, I had the PGA Championship (golf tournament) on in the background. Anyway, one of the better players (Rickie Fowler) took a calculated gamble. It backfired and he found himself in a worse position than before (and ended up making triple bogey on the hole).

However, what I found interesting was that after his mis-fortune, nothing in his demeanor changed. Just looking at him, you would have had no idea that he was in a bad spot. He simply took a couple deep breaths and then went through his pre-shot routine and got set to play his next shot. After all, there was literally nothing he could do about the bad shot after it was over. It happened. He could pout, get angry, and make things worse or he could let it go and re-focus on making the best of his next shot.

By the way, he made birdie shortly after his bad hole:

However, what I found interesting was that after his mis-fortune, nothing in his demeanor changed. Just looking at him, you would have had no idea that he was in a bad spot. He simply took a couple deep breaths and then went through his pre-shot routine and got set to play his next shot. After all, there was literally nothing he could do about the bad shot after it was over. It happened. He could pout, get angry, and make things worse or he could let it go and re-focus on making the best of his next shot.

By the way, he made birdie shortly after his bad hole:

I realized how similar that situation was to trading. I mean, after you take a trade (win or lose) there's nothing you can do about it. You simply have to re-focus on making the best possible decision in the now. After all, trading is just a series of decisions, and if you can continually focus on making the best possible decision at any given moment in time, the results take care of themselves.

So, how can you apply this to your trading?

In my opinion, you can create a "pre-shot routine" for yourself.

The way I teach it is by following a very specific decision making process.

You need to be able to tell the market's "story" on 3 different levels:
 - The "now" or what I call "box" level of evidence
 - The "intermediate" or what I call "zone" level of evidence
 - The "longer term" or what I call "big picture bias" level of evidence

If you can tell each of those stories independently, you can determine when you have at least "2 out of 3" in your favor and you can rest assured you have an edge.

(***NOTE: this method of decision making is explained in this video from last week)

What are the benefits of this line of thinking:

1) It's repeatable. You're not flying by the seat of your pants. Every trade decision goes through the same decision making "filter".

2) It's an anchor. You know, whether you just won or you just lost, that you can depend on your decision making framework.

Hopefully you've found this helpful.

Let me know any questions you might have.

Thanks,
Justin
info@daytradethemarkets.com
https://daytradethemarkets.com