The end of the day trading routine

The end of your trading day is just as important as the beginning, and developing a routine and checklist is an excellent discipline to get into.

Developing an end-of-day routine will make sure that you have protected any risky positions and are prepared for the next day.

Following certain key steps will make sure that you have protected any risky positions, prepared for the following day, recorded any information that will be useful in the future and are able to relax and unwind so that you are fresh for the following trading session.

End-of-day trading checklist

Creating a checklist of important steps to work through at the end of the day makes sure you miss nothing out.

Your trading checklist should cover everything you need to do, but be as short as possible with the most important steps at the top.

Creating a Hard Copy Checklist

Print out a hard copy that is always to hand, but make sure that you memorise the checklist too – this will help it become second nature and speed up the end-of-day process.

Your trading checklist should include the following steps:

Step 1: close out your trades

Prices can sometimes jump or fall significantly when markets are closed, leading to a big gap between their closing level in the evening or on a Friday and their opening level on the following morning or Monday.

This can put your trading account at considerable risk.

So unless you are trading long term, always make sure therefore that you have closed out of any of your short to medium term trades that you think could be affected by big price fluctuations overnight or over a weekend.

Step 2: check your charts

Before you leave your trading desk, you need to be aware of any technical patterns or price levels that might change overnight or during the following day of trading.

Check what important technical levels or patterns might occur overnight and the following day, as well as any fundamental news that might be released.

Look at your price charts and make a note of anything to look out for. This will help speed up your preparation the following morning as well as reduce your stress levels when you first sit down to trade again.

Step 3: check the news

Similarly, take a look at any fundamental news that is due to break overnight or the following day that might affect any positions you choose to keep open or that will be crucial to the following trading day.

Depending on which markets you are trading, this could include the release of economic data or company news, important political meetings or key decisions from institutions like central banks.

Step 4: double-check your stop losses

For any trades that you do decide to keep open overnight or over the weekend, it is vital to make sure you have protected yourself with a well-placed stop loss.

Strict money management is vital - check that any open positions are protected with a stop loss.

Strict money management will help protect your trading account balance as well as your stress levels.

Depending on your risk to reward goals, your profit target and how much volatility you expect to occur while markets are closed, you may want to tweak the position of any existing stop losses before you leave your desk.

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Step 5: back up your data

Backing up vital data such as trading records, chart observations and your daily preparation sheet makes sure that you learn from every trading experience you have.

It also means you won’t start your next trading session in a panic.

Step 6: complete your end-of-day diary

Although recording a trading journal is important to keep track of qualitative and quantitative results, many traders also keep a separate diary that they fill in daily.

Some traders also keep an end-of-day trading diary to record their trading results as well as their emotions. This helps you get the day in perspective and can be a useful reference tool in the future.

This helps you put the day into perspective before you leave your desk. It helps you relax overnight and is useful to refer to in the future.

You can use either a simple dated diary or a spreadsheet, which should include the following:

  • Your daily profit and loss after commissions
  • The number of trades that you have placed
  • Your mood at the close of day - were you happy/angry/frustrated/dejected/euphoric?

Step 7: tidy your desk

Many traders hold to the mantra that a clear desk breeds a clear mind.

Tidying your desk at the end of the day helps you start your next trading session with a clean slate.

A tidy desk breeds a tidy mind! Clearing your desk at the end of the day means you can start each trading session with a clean slate.

This gets you in the right psychological frame of mind as well as ensuring you are not scrambling around looking for things like your preparation sheet when you should be focusing on the markets.

Step 8: wind down psychologically

The psychological aspect of trading should never be ignored – your mood has a massive impact on the trading decisions you make and therefore your results.

Read our module on trading psychology to learn more about this:

Subject
Manage your emotions and improve your mindset. A solid understanding of psychology helps you stick to your strategy and the rules of money management.

Relaxing properly after a trading session means you will be fresh for the next one. Working through your checklist is one of the best ways of leaving your trader-self at your desk.

At the end of day, it is vital to try and relax and forget about trading, switching from professional to personal mode. This will mean that you are fresh for the next session.

Ultimately, following your end-of-day trading checklist is one of the best tools for achieving this state of mind. Completing all the steps above will help you leave your desk confident that any trades are protected and you are already prepared for the following day.

Summary

In this lesson you have learned that …

  • … developing an end-of-day routine will make sure that you have protected any risky positions and are prepared for the next day.
  • … it will also ensure that you have recorded any information that will be useful for the future and are able to relax and unwind ready for the next trading session.
  • … creating a trading checklist of important steps to work through at the end of the day will make sure you miss nothing out.
  • … you should always make sure you have closed out any trades that you think could be hit by big price fluctuations while markets are closed.
  • … you should always check price charts for any technical patterns that might affect you overnight or during the following day of trading.
  • … you should look at any fundamental news that is due to break overnight or the following day that could affect any positions you choose to keep open.
  • … strict money management is vital – check that any open positions are protected with a well-placed stop loss.
  • … backing up vital data such as trading records and chart observations means you learn from every trading experience you have.
  • … an end-of-day diary can help you get the day in perspective and can be a useful reference tool for the future.
  • … a tidy desk breeds a tidy mind – clear your desk at the end of each day so you can start the next trading session with a clean slate.
  • … make sure you wind down psychologically and are able to forget about trading once the day has ended – working through your checklist will help you achieve this.

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