Day trading is not easy, and anyone who tells you otherwise is lying. But it can be simpler than you think. Keeping things simple is a mark of consistent traders. You can focus on what matters most to your profitability by staying simple.
Here, you’ll find nine tips to shred a bloated trading plan.
Of course, not every suggestion you find here is suitable for you. But each one is tightly scoped so that it is practical and actionable.
The key to enhancing focus is to reduce the number of moving parts. And this is our main aim on this journey.
How To Keep Things Simple For Day Trading
Simplify your trading by following these nine steps:
- De-clutter your trading desk
- Clean up your trading computer
- Remove one trading indicator
- Remove your newsfeed
- Passive trade management
- Stick to one trading setup
- Trade one market
- Use one trading time-frame
- Accept infrequent trades
1. De-clutter your trading desk
Expect to spend long hours at your trading desk as a day trader. Hence, a clean and organized workspace is critical for simplifying your trading environment.
A clear trading desk also cuts the risk of physical accidents like spilling coffee on your keyboard. Murphy’s Law dictates that the best trade of the day will occur while you clean up your mess.
Allocate 10 minutes after each trading session to tidy up your desk so that you will start the next day with a fresh trading environment.
2. Clean up your trading computer
Other than physical clutter, digital clutter is also a problem.
However, it is often overlooked because it doesn’t really stand in our way. Well, until your computer starts to slow down and stop responding to your click on the “Buy” button.
Prevention beats cure.
- If you can, dedicate a computer to your trading activities.
- Do not download or install any non-trading applications. That will significantly lower the digital clutter in the first place.
- Perform a digital spring cleaning regularly. You can do so manually or use dedicated software like CCleaner from Piriform (not affiliated), which has a free version that works well.
3. Remove one trading indicator
Regarding trading indicators, “the more, the merrier” is not true.
With more indicators, you need more time to interpret, and they might very well lead to analysis paralysis.
New traders often overload their charts with indicators for fear of missing out. Being unfamiliar with the markets, new traders tend to get overwhelmed by the fear of not knowing what you don’t know. This feeling might never go away, but it gets better as you gain experience.
The problem is that many traders keep unnecessary indicators out of comfort and don’t bother scrutinizing the value of each one.
Remove one trading indicator from your charts today to assess if you really need it. It could be the crutch you can do without.
If you want to simplify your trading and get used to trading without indicators, consider honing your price action analysis skills.
Here are some resources to get you started:
- How to Trade with Price Action
- Top 10 Price Action Trading Books
- Day Trading with Price Action Trading Course
4. Remove the news feed when you are trading
Many day traders watch the news feed as they trade. Some do that to pass the time, while others fear missing out on critical news.
The news feed is essentially a trading indicator.
If you do not know how to use it, your newsfeed becomes noise, and you are better off without it.
- The news is better than expected, but your technical analysis points down. What do you do? What weight do you put on the information?
- When the news is worse than expected, but your indicators are bullish. What do you do? Are you a contrarian?
These questions complicate your trading thought process and do not add value unless you have a solid system to trade news.
5. “All in, all out” Trade Management
Do you have a complicated method for scaling in and scaling out of a trading strategy?
Are you sure it is helping you to earn more? Have you analyzed your trades to confirm this?
If not, you are just muddling your trade execution unnecessarily. There’s more room for execution error with a scaling approach, especially when the scaling logic is complex.
Also, when you scale in and out of your positions, your trading records become more complicated. As a result, it can be more difficult to analyze what went right and diagnose what went wrong with your trading strategy.
So, unless you have a compelling reason, start with the most straightforward approach going all in, all out.
6. Use only one trading setup – keep it simple
Choose only one trading setup from this list. And learn to use it well.
It’s important to understand that none of the trading setups guarantee you profits. It takes years of practice and observation for a setup to work for you consistently.
Sticking to one trading setup gives you a consistent and focused starting point. In addition, it simplifies your trading and helps you to concentrate. Hence, this is the best way to expedite your progress.
One sharp knife is better than a dozen blunt ones.
7. Trade only one market
Forex? Futures? Stocks? Crypto? All of them?
Each market has different volatility, liquidity, tick sizes, and other peculiarities.
If you trade multiple markets, you need to size your positions separately each time to risk the same amount.
Every market has its own price tendencies at different times of the day. On top of that, you will also need to pick up the quirks of each market.
Sticking to one market simplifies both your position sizing and learning process.
8. Stay in the same trading time frame.
Like the choice of instrument, your trading time frame impacts the level of trade risk.
Keep it constant for simple position sizing.
In addition, keeping the time-frame ceteris paribus allows us to appreciate better what is working in our day trading strategy.
(Of course, there is a case for switching time frames to adapt to changes in the market’s volatility. But this should not be a common occurrence.)
Need help choosing the best trading time frame? This article explores the relevant factors.
9. Accept infrequent trades
If you follow the recommendations above, you will take fewer trades.
With only one time frame, one instrument, and one trading strategy, you will have limited trading opportunities.
You must accept this.
If you want simplicity as a day trader, you must think like a hunter that stalks its prey quietly over a long period before gunning it down.
Patience is a virtue, and it is essential for the day trader with a simple approach.
Maintain a Simple Trading Plan
These are nine ways to simplify your day trading.
Not all will work for you. However, if you aim to simplify the way you trade, consider each point seriously.
You need not go on an extreme minimalist route.
But from now on, use this as an operating principle:
Look carefully at each addition to your trading process. What is its marginal value?
If it does not help you, remove it. If it does, keep it.
Make things as simple as possible, but not simpler.
The article was first published on 12 December 2013 and updated on 13 April 2022.