In this article, I want to teach you my trading routine and exactly how I trade the markets, which I do using two trading strategies. These are The PowerX Strategy and The Wheel Strategy.
I want to explain what happens from the time I wake up until the time I start trading at 8:15am Central Time.
My routine has changed a bit. I want to tell you why this routine has changed, what I did before, and what I’m doing right now.
Getting Started In The Morning
At 6:30am the alarm clock rings and I wake up. I’m quick to get out of bed, and this is something that has changed for me. I used to stay in bed for up to an hour and would do some reading, but then I realized that was kind of lazy.
By 6:35am I’m actually getting out of bed and jumping in the shower. I’m usually done by 6:50am.
Then at 6:50am, I make a cup of coffee, and that’s when I get started.
Getting A Jump On The Markets
At 6:55am, I check the pre-market, and there are two things that I check here.
The first thing that I’m checking here at pre-market trading is number one: what are the index futures doing? I want to know what is the mini S&P doing, the e-mini Nasdaq as we head into the open.
When those are down, that’s when we have many opportunities according to The Wheel Strategy. So I’d kind of like to know what market we expect.
Number two is I want to know what are my positions doing, and here’s why. If I own stocks and I see there’s a massive jump premarket, I want to sell calls or even sell the whole position right away.
This helps me a bit with my prioritization, and we’ll talk about this a little bit more as we get closer to my opening here as I start trading right away.
At 7:00am, this is when I’m reading newsletters and browsing through websites for news about the markets. I like to read Seeking Alpha’s daily newsletter, “Wall Street breakfast.” This gives me a few headlines. Also, I love MorningBrew’s daily newsletter, I read it every morning.
I have a subscription to CNBC Pro, Bloomberg Pro, the New York Times, Business Insider, and to Market Insider. Business Insider and Market Insider are others I read to know the trends, while the rest get me caught up on news.
My Stock Market Update
I’m reading these because, every morning, our head trading coach Mark and I do a stock market update.
At 7:45am I go into the studio that I have in my homes in Texas and in Florida, and we run through what exactly we want to tell you.
At 8:00am on my YouTube channel is when we have our stock market update, and share with you everything I read that morning. We do this for 15 minutes and now we get to the point where I actually start my personal trading.
Looking For Trade Opportunities For The PowerX Strategy
Three times a week I look for trades with our Mastermind, and here is what I do first. I first scan for opportunities according to The PowerX Strategy. So I bring up our PowerX Optimizer, and I run the scanner with the default setting.
According to the default settings, I’m looking for a 1.5 – 4.5 risk-reward ratio for longs only, and an ROI of at least 40%. I also want to see a winning percentage of at least 40%, a closing price between $5-250, a profit factor higher than 2, and at least 12 trades.
At 8:15am I hit “Scan” and see what stocks pop up on The PowerX Optimizer according to these criteria.
When looking at the stocks that come up on the scanner, I’m looking at four criteria.
The most important criteria is the P&L chart. I want to see that the P&L chart goes up from the lower left to the upper right during the past two years.
I do this because the last two years were crazy for the markets.
Looking at the Nasdaq, for example, we had this down move in 2018, followed by a few retracements here that were actually solid 10-20% retracement.
There was the COVID drop, after this we had a quick recovery, followed by a scare last year towards the end of 2020 where markets dropped again.
There was a little bit of everything over the past two years and this is what I am looking for.
Then I flag the stock with yes, no, or maybe.
Last week, for example, MUR came up on the scanner and looked like a much better pick.
I was also looking at CELH, which also has a nice P&L chart.
I’m looking for a total of four different criteria, but the most important one is the profit and loss chart.
The other three are:
Trendability. When looking at a chart, do we see nice trends?
The next criteria is gaps, do we see a lot of gaps on the chart?
The third is the five-dollar line, meaning I want to make sure that we are not trading below $5.
These are the criteria, together with the P&L, that make the four criteria that I am looking for.
Checking My Existing PowerX Positions
After I look for new opportunities, I then check my existing PowerX positions.
I usually put them right here into my watch list. Here I can see if I have any exits.
The exits that I’m looking for are my profit target or my stop loss. I’ll also check if any position has a black bar, because on a black bar I would exit the position in the morning.
I’ll explain in a moment why I look for this the next morning, and not the previous day.
Another thing that I do when I’m looking for trading opportunities for The PowerX Strategy is, set up alarms on TradingView.
This is because I only want to trade an option if I choose not to trade the stock. Notice in the image above where it says, “Only consider an entry if this signal has triggered.”
So this means that Z (Zillow Group, Inc.), in this case, has to trade above $61.87. If it doesn’t trade above $61.87 this signal is used either null or void, so I want to make sure that it moves above that price.
Upcoming versions of PowerX Optimizer will have alerts integrated within the PowerX Optimizer.
This is what I do for my PowerX trades. After I’ve done all this, then I log into my trading platforms. I do this around 8:25am.
What Trading Platform Do I Use?
Right now, I’m still using two trading platforms. I’m using tastyworks, which I will retire by the end of the year and move all my accounts to Tradier. I’m moving all my accounts to Tradier for a very simple reason, tastyworks charged me around $3,500 in commissions this year.
This is reasonable for the account size and the amount that I’m trading. But, on Tradier, I would have paid only $120 in commissions. That is actually a pretty huge difference.
Also, tastyworks charges me 7% interest rates on the margin that I’m using with them, while Tradier is charging me only 5% in interest rates.
This year I’ve paid around $4,000 in interest ontastyworks. With Tradier, I will save quite a lot of money by switching over. The end of the year is the perfect time to do this.
Checking Pre-Market Prices
At 8:27am, I’m checking the pre-market prices again to determine if I have any entries or exits.
At this point, we’re pretty close to the open, only three minutes away, and I’m getting a pretty good idea.
Why is that important here for me? For PowerX trades, if a trade would trigger above, or would open above the trigger price, I would have to place the option trade right away.
For Wheel trades, if I do have a position and the Wheel trade gaps up, I either want to sell the position immediately or I want to sell calls quite immediately.
In a nutshell, I’m setting my priorities of what to do as we are opening.
I might be in many PowerX positions, or many Wheel positions. According to my trading plan, I like to be in five positions with each of these strategies. This means I could have 10 active positions.
If you’re in 10 positions, which one do you focus on first? It helps me to figure this out by checking pre-market prices to see where the stocks that I’m interested in open. This way, I can write down what my priorities will be.
What I Do When The Markets Open
The markets open at 8:30am Central. Now, if needed, I will place orders right then. Most of the time it is not needed, and around 8:31am is when the Wheel scanner starts.
You see, this is where now I’m shifting mentally because I’m looking at PowerX trades from 8:15am until 8:25am. 10 minutes for me is enough time to do this, but at 8:31am, I’m shifting my focus to the Wheel scanner.
On The Wheel Scanner, it will have a bunch of stocks coming up automatically. There’s one thing that I like to do to not get overwhelmed, and this is by adjusting the filters.
On Mondays and Tuesdays, I like to look for expirations that expire on Friday. For instance, if today would be a Monday or Tuesday, I would only consider options that are expiring this Friday.
Once Wednesday, Thursday, and Friday come around, I start looking at expirations for both this Friday and next Friday. I will see fewer opportunities for this week’s end, and I will see more opportunities for next week’s expiration.
What I do is I go through the list and look at the stock. I determine whether it is a value stock or a growth stock. And here you can already see in the example above, this is a crazy stock that I do not want to own.
When it comes to the Wheel, there are two important questions that you need to ask yourself.
Number one, do I want to own that stock?
Number two, do I want to own it at that strike price?
Let’s look at ANET, Arista Networks.
Would you want to own this stock? A few weeks ago, just mid-November, it was trading at $516, and now it is trading at $130, has been trading a $400.
Based on these extreme price fluctuations, this stock would be a clear no for me.
We can use APPS, Digital Turbine Inc., as another example. Same question for this stock. Is this a stock you would want to own? Then question number two, do you want to own it at the strike price that is available here?
We need to figure out if APPS is a value stock or a growth stock. Just looking at the chart pictured above, it’s kind of crazy.
In 2020, it was trading around $5, then climbed all the way up to more than $100. That’s 20x, or 2,000%. Ever since it has been trading in a wild range between $50 and $100.
For me, this would be too wild.
How To Tell A Growth Stock From A Value Stock
Now let me show you how you can quickly see whether this is a value stock or a growth stock.
You simply click on this little megaphone that we have here on the right-hand side. When you click on the megaphone, it brings up Google Finance with all the information, and here’s what I like to look for.
I want to see how are the financial performance annually and quarterly.
Here, you can see, hey are showing solid growth, but they’re kind of growing crazy. Their revenue here grows from 100 million in 2019, to 300 million in 2021. That is a lot, about 3x. This is typical for a growth stock.
What is very interesting here that they are profitable. Often growth stocks are not profitable.
This is pretty good. As you can see in the last quarter, pictured above, they had a loss after they reported the last earnings. Right now, it’s crashing and burning.
For me, the swings are a bit too wild. In a matter of weeks to go from 95 to 50, so I would flag this as a no.
This is how I go through this every morning at 8:31am, and the scanner refreshes every two minutes.
If a stock comes up for a drug manufacturer, I usually stay away from them. They are automatic “no’s.” With drug manufacturers, if they have a drug that is passing a trial, it’s all good, it’s curing something, and they will explode in value. But, it can also quickly crash down.
JETS it’s always an interesting one because JETS is an ETF of all the airlines. But you see, even though I wouldn’t mind owning this ETF, I don’t want this at a strike price of 18.50. Right now this stock is moving lower. So I can flag it as a no because this makes it easier.
As you can see, I’m sorting here by flags. So instead of sorting by symbol name, I see exactly which of the stocks I have not yet flagged.
A stock I am currently in, at the time of this writing, is Boeing. So this is a stock that I’m in at 207.50. I flagged this earlier as a yes because I have traded it. Right now, the strike price of 182.50, is definitely intriguing, so this is a stock that I’m interested in trading.
MARA is another interesting stock. MARA is not a value stock and we have several Mastermind members who have traded it very successfully. Buying MARA at 27 is definitely intriguing, but not a value stock, definitely a growth stock, and very heavily correlated here with bitcoin.
Look at how MARA has behaved in the past two years, and compare it to how bitcoin has behaved over the past two years. Do you see that there are some similarities? A lot of similarities. Keep this in mind.
UAL, United Airlines, is another stock I was interested in, but I liked it better at the beginning of the week. Now it’s a little bit all over the place so I would flag this as no.
To reiterate, when you start The Wheel Scanner, the goal is to look for value stocks. The key questions here that you need to ask yourself are number one, “do I want to own that stock?” And number two, “do I want to own that stock at the strike price that is suggested?”
The PowerX Optimizer also has a calculator you can use to calculate whether it makes sense to sell calls or sell puts. I mainly use it here for the scanner.
If I find something that is interesting, all I do here is I just click on “Add.” This way it adds it over into the calculator to tell me how many shares or options I should buy or sell. It also tells me what is the minimum premium that I should receive.
It really is this simple. When stocks come up, I flag it as yes, no, maybe, or even never.
There are certain stocks that I will never trade. Right now, I’m staying away from Chinese stocks. I don’t like to trade leveraged ETFs. I don’t like to trade biotech stocks. So I can flag them as “never” so that they never pop up again.
When Is The Best Time To Trade?
A question that I get asked a lot is, “When is the best time to trade? Is it early in the morning? Is it later?” Here is the deal.
For me personally, if I’m trading at 9:00am, I’m done. So if I don’t find anything to trade in the first 30 minutes, I’m done.
When trading with our Mastermind members, I trade until 9:30am. This extra 30 minutes is due to answering their questions when we trade live together. These are usually questions about individual trades.
What Do I Do When I’m Done Trading For The Day?
What do I do before I shut down my trading platforms? Before shutting down, there are a few things that I do to make sure that I’m not waking up to a surprise later that day.
Number one is I’m double-checking my orders. Did I use a day order where I wanted to use a day order? Did I use GTC where I wanted to use a GTC order? Do I have my exit orders in place?
What I mean by having my exit order in place, when I’m trading the PowerX Strategy, would be my profit target and my stop loss. If it’s a position for The Wheel Strategy, this would be a 90% profit-taking order if I can get 90% of the max profits.
The other thing that you need to be really careful about is to look for rejected orders. This happened to me on tastyworks twice recently. I thought I placed an order, they said, “OK, the order is working,” and a few minutes later they rejected it. I thought I was in a trade I wasn’t actually in.
When talking to my head coach, Mark Hodge, I said, “Did I forget to click send?” We looked in the log and this is when we figured out this order was rejected. It’s something that is new, I have not experienced this in the past.
Recently this is something that seems to be quite unique for tastyworks. This is why you want to make sure that all the orders that you think are in the market are actually in the market.
The last thing is that I enter my trades into my trading log. After this I’m ready to shut everything down. Honestly, I usually don’t look at the markets throughout the rest of the day. I just go about my day.
How Has My Trading Routine Changed?
Here is how my trading routine has changed. Before I didn’t wake up at 6:30am. I used to wake up around 7:00am and then I did a lot of reading from 7:00am-8:00am. Then at 8:00am I jumped in the shower and everything from here was exactly the same.
8:15am onward, I haven’t changed a thing in many, many years. But around April or May 2021, we decided to do our live stock market update streams every morning.
I’ve always done a lot of reading. All of the newsletters that I read takes me around 45 minutes to an hour. I just thought it would be cool if we could actually go live and tell you about what’s happening in the markets.
Make Your Trading Routine Your Own
You can dramatically shorten this. Here is what you could do. You could actually wake up an hour later. Then take a shower, make coffee, or do whatever you prefer doing in the morning.
I would say it makes a lot of sense to listen to our stock market update at 8:00am, because this way you know what is happening. And then at 8:15am, you start trading. So you can shorten this whole morning routine by an hour easily.
Now you know exactly how I’m trading my accounts with these two strategies. You also know minute by minute exactly what I do, and I’ve shown you the tool that I like to use.
If you would like to learn more about these two strategies, I suggest picking up a copy of my books. You can grab a copy of The PowerX Strategy HERE, and a copy of The Wheel Strategy HERE. All you have to do is cover the cost of shipping.