In this article, I’m going to share with you my trading routine.
I will show you how I pick the best stocks and options to trade, how I manage my positions, and I’ll also show you the tools that I use.
Now, the most important thing for me, it’s all about SRC profits.
SRC stands for systematic, repeatable and consistent.
To achieve SRC profits, I’m trading two different trading strategies. These strategies are the PowerX strategy and The Wheel strategy.
As a trader, you need three things that I refer to as the pillars of successful trading.
The Pillars Of Successful Trading
Pillar number one, you need to have the right strategy, which shows you:
- When to enter.
- When to exit.
- What to trade.
Pillar number two, you need to have the right tools that help you to make the best decisions.
Pillar number three is having the right mindset.
I’m going to talk about all three in this article as I show you my exact trading routine that I go through every single morning.
My Morning Routine
I’m usually in front of my computer around 8:15 am, and I live in Austin, TX so this is Central Time.
This is 15 minutes before the markets open.
As I mentioned, I focus on two different strategies, the PowerX strategy and also The Wheel strategy.
The first thing in the morning that I do is to focus first on the PowerX strategy.
The PowerX Strategy
Now, the PowerX strategy is a trend following strategy. With this strategy, we try to take advantage of short trends in the market, both to the upside and the downside.
I want to share my screen with you right now so that you see exactly what my computer looks like in the morning, 15 minutes before the markets open.
So the tool that you see here is the PowerX Optimizer.
In order to find the best trades, according to the PowerX strategy, I run the scanner. Here’s what that looks like:
So this tool here is showing me the best stocks. It finds the best stocks for me every day according to the PowerX strategy.
In order to do this, all I need to do is run the scanner according to my criteria.
What PowerX Optimizer does is that it goes back and figures out how much money would I have made or lost if I had traded a particular stock for the past year using the PowerX strategy.
I only want to see stocks that would give me at least a 60% return on my investment.
I also want to make sure that I’m only trading stocks between $5 and $250.
Next, I want to make sure that I only trade stocks that have a profit factor that is higher than 3, meaning that for every dollar that I lost, I would have made $3.
I also want to see a risk-reward ratio higher than 2. So for every dollar that I risk, I want to make at least $2.
The next criteria that I have here is for the minimum amount of trades. I want to see at least 12 trades over the past year with a minimum winning percentage of 40%.
Now, for me personally, I also like to have the criteria of a minimum volume of 500,000 shares traded per day, and this would be the average over the past 7 days.
So this is what I look for. I simply click on OK, and then it’ll run yesterday’s data.
It goes through 11,000 – 13,000 stocks.
Using The PowerX Optimizer Stock Scanner
Out of these thousands and thousands of stocks, it filters down the best 2 to 8 trades according to these criteria.
As you can see, there are 6 stocks that came up here in the lower right: ATRA, ENPH, ETRN, LRN, and SHLX.
So you can see that this all happens very fast. This is why I only need to be in front of my computer 15 minutes before the markets open.
Now, I will use another filter that I apply to these stocks where I now look at each stock individually. I look for:
- Gappiness. Have there been any gaps?
- What does the P&L chart look like?
Let’s take a look at exactly what I’m talking about with ATRA.
Number one, I want to look for gappiness, have there been any gaps in the past year?
Here, I don’t really see any gaps, so this criteria checks out for this stock.
Number two, I’m looking for the trendability, and in terms of trendability, I want to see that a stock has nice moves to the upside, and/or to the downside.
At first glance, it looks like this stock would have nice trendability, so these criteria also check out.
Now for the third criteria I’m looking for, a nice P&L chart.
What does this mean? Well, this is where we are looking at the chart here at the bottom, because this chart shows me how much money would I have made over the past year if I had traded this stock according to the rules of the PowerX strategy.
If we look closer at this chart you’ll see that for most of the time it was rather flat, and not going anywhere.
You can also see I would have made some money during the middle of the year.
Then pretty much for the last few months, July, August, September, October, and November, it would have just been flat.
So this is where here the P&L chart fails the test. So this stock did not pass all three tests, and therefore, I would not take this trade ATRA.
Now let’s take a look at the next one, ENPH, Enphase Energy, and see if it meets my three criteria.
So first of all, as you know, the first criteria is gappiness, and I see that there are some gaps here.
So the first criteria, which is gappiness, it’s already not too good.
The second criteria, trendability, I want to see that I have nice trends to the upside and the downside.
So in terms of trends, it looks pretty good in terms of trends to the upside, but there are no trends to the downside.
As you can see, what this stock typically does, is it moves up, and then it goes sideways. Then it moves up, then it goes sideways, then it moves up, then it goes sideways.
This is where, based on my criteria, this stock in terms of trendability would not pass the test.
So we look for gappiness and this would be a no, and the second would be for trendability, and that would be a no. So I don’t really have to continue here because I see gaps and I see that there aren’t any of the nice trends that I’m looking for.
Now, as you can see, this here goes really, really fast because PowerX Optimizer is already taking most of the guesswork out of it and presents me with only a few stocks here.
I only have five options. Let’s take a look at another one here. ETRN, Equitrans Midstream Corporation.
Just like with the previous two stocks, I’m applying my three criteria here.
I look to see if there are any gaps, and in terms of gappiness, I must say I don’t see any gaps so we are good on this one here with my first criteria.
So the second criteria is trendability, and here’s what I see.
Yes, it has been trending nice to the upside and the downside, but the trendability gets rather choppy.
Then when we look at the P&L chart, I also see that during this time I would have made nice profits, but then for a long, long time, the chart gets rather flat. This is not what I’m looking for.
So as you can see, it only really takes me a few minutes to find the best trades.
I’m using examples today where I did not find really any perfect trades that I wanted to do today, and that is fine because I’ll show you, I’m currently in a few positions, and I want to show you exactly what I’m in right now.
Analyzing My Current Positions
So after I look for new positions, I’m checking my existing positions, and to do this, I just click on the watch list.
I currently have four positions on, and I highly recommend that you never have more than five positions.
One of the stocks that I’m in is BKU, and just to show you what I’m looking for, again, in terms of trendability, gappiness, and P&L, this here is a great stock because it meets every criteria that I’m looking for.
I see that I have very nice trends to the upside, to the downside, to the upside, to the downside, to the upside, to the downside. Perfect.
I don’t see any gaps, and if you look at the P&L here, you see that it is moving nicely from the lower left to the upper right.
Looking at some of the key performance metrics here, we see if I had traded this stock, BKU, over the past year using the PowerX strategy, I would have had a total of 17 trades.
10 of them are winning trades and 7 of them are losing trades, meaning that I have a 55% winning percentage, which is pretty good.
The profit factor is $3.11, meaning that for every dollar I have lost, I would have made at least $3.11, which is also good.
Overall, this looks like a great stock to trade and this is why I traded it.
Now again, the three things that a trading strategy needs to answer is:
Number one, what should I trade, and we talked about what should I trade.
Number two, it should tell me when exactly to enter, and as you can see, PowerX Optimizer tells me exactly when to enter by here in the upper right, saying long at $32.15.
Now, the third criteria is when to exit, and this is where also PowerX Optimizer tells me exactly when to exit.
So this is when here, with BKU, I see where I entered, which is the blue line.
So the first blue line is my entry, and if we go down to the red line, this would be my stop loss. Then the green line on top is my profit target.
So we see I’m well on my way, and I see these values here in the data window as well. I see exactly where my stop loss is at $30.39. So if we move from $32.15 where I entered, to $30.39, I would exit.
If it goes up to $35.87 then I’m taking profits. I’m risking $1.76 trying to make $3.72. So the risk-reward ratio here is 1:2.11 meaning that I make twice as much money on my winning trade here, then I lose on my losing trade.
I like to have a risk-reward ratio of at least 2:1 so that I make twice as much money on my winning trades than I lose on my losing trades.
This way, even if I’m only right half of the time, I lose much less on my losing positions than I make on my winning positions.
This is why it yields here to a nice ROI, return on investment.
I’m looking for at least a 60% return on my investment.
LL is another position that I’m in.
I’m having a stop loss, and my profit target here is at $41.51.
I entered at $31, and I am looking for a $10 move.
MUR another trade that I’m currently in, and with this position there’s nothing else for me to do. I was able to take profits on MUR already, and right now I’m waiting for MUR to go up to $15.30 as you can see in the upper right-hand corner. $15.30 is my profit target.
So as you can see, it’s easy enough. This means in terms of managing my existing positions, there is nothing to do but wait.
How My Positions Are Currently Doing
Now, let me go live into the markets (live at the time of writing this article) so that you see right now what these positions are doing.
This is a rather small account that I set up to show you how I can trade, or how to grow a small account.
I’m currently making $140 on BKU & $60 on LL.
Today MUR is slightly down, but overall I’m still up, and I’m up $112 for today on PVAC.
So overall, these four stocks are up a little bit over $300 today if we add them up.
It’s important to remember, there will not always be winning trades. There will be losing trades. Losses are part of our business as a trader, and that’s fine as long as you keep your losses small, right?
Now, if you look at the open P&L, and this is since I entered the positions, so the open P&L, I’m already up $400 on BKU, remaining $134 on MUR, and $320 on PVAC.
This is how much? Almost $900 on just these four positions that I’m in.
So LL is down $10, but let me show you what happens if I had found a stock to trade. When I find positions to trades I have two options.
Number one, I can place a stock trade, and by doing this, PowerX Optimizer shows me based on my account settings, how many positions I should trade.
Finding Options To Trade
So let’s just say that you liked ENPH. Now we talked about this, it wasn’t really my favorite, but let’s just pretend for a moment that this is a stock that we want to trade.
Now I can adjust my account size in the settings. So in the trading account settings, you can say, do you have a $10,000 account? Do you have a $20,000 account? Do you have a $50,000 account, $100,000 account, how much do you have in your account?
Then of course how much of this are you willing to risk? Now I always recommend that you use 2% of your account on any given trade.
So let’s just assume we are trading a $20,000 account.
This is where you see right here, under position size, you see that I should trade 14 stocks. The PowerX Optimizer tells me what to trade when to enter and how many stocks to trade. Very easy.
Now, let’s say that you’re interested in trading options. In this case, PowerX Optimizer shows you what are the best options to trade.
You see when you’re trading options, whether you’re an experienced options trader, or if you’re new to trading options, you always need to know if you should buy a call or a put.
The PowerX Optimizer will tell you this.
It will tell you what the right strike price is, how many days to expiration you have, and what is the expiration date.
It will also suggest an entry. The PowerX Optimizer shows you exactly what to do, and this is why I love this trading tool because it makes my life so much easier.
The Wheel Strategy
So this was the first 15 minutes of my morning trading routine, and by now the markets are probably open, so let’s shift gears and let’s now talk about the second strategy that I like to use, which is The Wheel Strategy.
This is a completely different strategy from the PowerX strategy, so don’t mix and match these two.
The PowerX strategy is taking advantage of small moves in the market to the upside or the downside.
The Wheel strategy is different. With the Wheel strategy, we are no longer buying options, now we are selling options, and collecting the premium if we are right.
So we need to place an educated bet, and if you have been following me on YouTube for a while, then you have seen my trades according to the Wheel strategy.
I want to show you how this tool helps me to find the best stocks & options to trade because I’ll say this again, as it’s very important.
A trading strategy answers the following three questions: What to trade, when to enter, and when to exit.
With The Wheel strategy, especially with this strategy, the “what” to trade is the most important.
So I want to show you the Wheel scanner right now, and how PowerX Optimizer makes it super easy for me to find the right stocks.
So here now I’m switching over to a tab that you see here, called “The Wheel Calculator.”
So I’m clicking on The Wheel Calculator, and what you see now in the lower right-hand corner is that a scanner popped up and this scanner is different.
This will show us conservative and more aggressive ways to trade, and the other thing that you need to know when trading the Wheel is not only what is a great stock to trade, but also what strike price and what expiration.
So as soon as I select a stock now it tells me, OK, the current stock price is $31.33.
The option strike price that makes the most sense, according to the Wheel strategy is $29.50. This means that the stock could drop 6%.
It gives me the expiration date and as I’m writing this, we have 8 days to expiration. So today is December 16th at the time of this writing, and this here will be my plan going into 2021.
Throughout the whole year 2021, I will be trading this plan that I’m showing you right now, the PowerX strategy as well as the Wheel strategy.
So we also see how much buying power is needed per option, and what is the annualized premium, which here is 30% and this is what I’m targeting.
If you are using a non-margin account, a cash account, you’re looking to 30% to 40% a year.
If you’re using a margin account, you’re looking at 60% to 80% per year. So super easy, because it shows me, for example, for DUST, or GPS, what my stock price is, what the drop in percentages is.
So these are super short trades where we can make hundreds of dollars in a matter of a few days.
So if I want to analyze any of these stocks, I would bring up a charting software, like TradingView.
I type in IQ for example, and see if this would make sense to trade.
As you can see right now, it is at 18.19 and PowerX Optimizer suggests that I can go for a strike price as low as 16.
Right now, this Wheel scanner is brand new, and we will have the charts integrated in PowerX Optimizer. This feature may be released by the time this article comes out but for now, we will continue to use TradingView.
For this stock, I’m looking at a strike price of 15 or 16, and I’m eyeballing it right now with an expiration of December 24th. So what do you think? Is this possible?
Well, we can zoom out a little bit and see what has IQ been doing over the past few months. As you can see, as we are zooming out, and 15 has been a super strong support level.
I mean, look at this, 15, 15, 15, 15. So this seems to be super strong support. So the key question that you need to ask yourself right now is, is it likely that we stay above 15?
Because if so, this is where we are going back to PowerX Optimizer to add this to the calculator.
So when I click this button here that says “Add to Calc,” it will add this information into this second column.
This is where you enter your buying power that you have in the account, and based on this amount, it is now calculating a few additional things. So let’s take a look.
After clicking on “Add to Calc,” it is showing me, OK for December 25th, of what I can expect with this particular option.
If I would get an option premium of $0.15, then I would trade based on my account size 17 options, and again PowerX Optimizer makes it so easy.
Again, it tells you what to trade? How many to trade? When to enter? It shows me exactly what is right now the price that I can get, and if we would switch over to the markets, you would see that this is exactly the price that we can get.
I would get a total premium of $255, and since there are 9 days to expiration, it means that I’m making $26 per day.
Again, I like to have up to 5 positions in my account. So my idea here is that I can always make at least $100 per day and this would be around $3,000 per month, all of this is on a rather small account.
I started trading this account a few months ago and it is a $50,000 account. So making $3,000 per month on a $50,000 account, not bad at all.
So as you can see, super easy, as it is also showing me exactly when to exit meaning that I’m selling this option for $0.15, and when I can buy it back for $0.02, I would make $229 right here in a matter of only 9 days.
The key question that you need to ask yourself before taking the trade is when looking at the chart, do you believe that this is a good trade?
Well, you see how PowerX Optimizer makes it easy for you to actually find really great trades because this here, I mean, no doubt this is a good trade because this is strong support at 15.
The PowerX Optimizer suggested that you can either do the 15 strike or we could actually go to the 16 strike making even more money, and this is up to you to decide and say, “OK, you know what, I actually see strong support already at 16, I’ll be happy to do this.” So you can certainly do this.
This is where PowerX Optimizer again suggests you both here, the 15 and the 16, and we can actually add this, the first option, to the calculator so that you see a detailed comparison.
In the beginning of the acticle, we talked about the three pillars of trading:
- Number one, you must have the right strategy, which shows you what to trade, when to enter, and when to exit.
- The second pillar of trading is you need to have the right tools that help you to make the best decisions.
- Number three, you need to have the right mindset.
And as you have seen, having the right tools makes my life so much easier, and using the PowerX Optimizer, is a very powerful tool so that I know exactly:
Number one, what to trade, I know exactly when to enter, I know exactly when to exit, and therefore I’m usually done with trading after 30 minutes, and I can spend the rest of the day however I want.
If you like the idea of having this tool and would like to have more info on the PowerX Optimizer, then click HERE where you can schedule a demo.
I just scratched the surface here because for me it was more important to show you my exact routine, what do I do when I start sitting in front of the computer.
I didn’t start with how I take a shower and brush my teeth, right?
What do I do when I sit in front of the computer is I first go through the PowerX trades and look for new opportunities, and then I manage my existing trades.
Number two, I look for opportunities according to the Wheel.
Just keep in mind, you must have powerful tools if you want to compete in the game of games.
If you want to compete against other traders, traders like me, and traders at Goldman Sachs, and traders who have a professional tool, YOU need professional tools as well.
Because if you don’t have the right tools, it would be like trying to win NASCAR riding on a llama, and it just doesn’t work. Anyhow. So now you know my trading routine and how I trade the markets, and I hope that this helps.
Read next: My Personal Plan For 2021