As trading winds down for 2018, many people have plans for the Christmas break and will keep their trading computers shut off until the new year.
Taking a break from trading is healthy and can do a lot to refresh any trader that interacts with the markets on a daily basis.
During the break, it is also a great time to be thinking. “how will I manage to get back into the swing of things when I resume trading?”
Vacations end and just like coming back into a workout routine after time off, there can be some pains along the way as you settle back into the markets.
Take Your Break From Trading – But Beware
The number of times in the past where I’ve ended up having some pretty terrible days off on the back of taking time off isn’t something I’m proud of.
But life and trading are there to teach us – and until we learn these lessons, they will be relived time and time again. So if you recognize that this has ever caused even the slightest of issues for you, you must decide on what to do in order to mitigate risk of it happening again in the future.
Trading is a business
The problem is that so many important aspects to trading are not exciting. If you’re anything like me, I’m sure coming back from vacation has you looking forward to get trading again. With all the distractions it’s easy to overlook the work that needs to be done and instead just start looking for trades.
But if you’re going to treat trading like a business – and stay in the game– you’re going to need to pay attention to these sorts of details.
Why do you think businesses do performance reviews for example?
Is it because they like to extrapolate all of the money they’re going make?
Or is it because important information about relative performance expectations, the state of their business and market conditions can be gleaned which may in turn help them to address weaknesses and plan for the future?
It’s probably not the exciting side of many businesses but it’s also necessary. Getting yourself to the level where you can trade effectively isn’t a party.
What Is Your Weakness?
Everyone is slightly different and so you must look at what you’re particularly susceptible to – there is no one size fits all.
There are a few areas of risk that I know I am susceptible to and I’m sure many others will be in the same boat.
The first area I know that traders will naturally suffer from is diminished contextual awareness. That is to say what is the current technical condition of the market, what fundamental events have taken place and what is the overall mood of the market?
Next I would put my routine and plan following up there. Some are much better than others at picking up where they left off as far as how they approach trading, but for me, I’m at my best when I’m in an unbroken string of days where I can really get into the markets and build up some momentum to my performances.
Execution sharpness is potentially going to be an issue depending on how long you’ve been away for.
Name The Problem. Fix The Problem.
After you understand what the potential issues can be, you need to be careful and diligent as you work your way back into things.
I’m not saying that you shouldn’t trade or you should trade smaller, although this is an option. If you’re thorough in the way you go about it there shouldn’t really be any need for this.
What you definitely should be doing though is going back a week or so before you left and re-running your charts bar by bar until the day you got back – you can do this fairly quickly and take notes on what you see.
Look at economic releases for those times and check to see if there was any major news and how the market reacted. This can help you to get back in sync with the markets and how they are trading.
Re-read your trading plan. Simply reminding yourself of what your trading is about helps avoid taking those non authorized trades. Taking special care in your preparation and logging your trades can help show you how effectively you’re executing and following your plan.
As far as sharpness in execution goes there are a few things which could help:
- This could be an argument for going back to the idea of trading smaller for a short period until you’re confident you are up to speed.
- Visualizing a number of different scenarios
- Breaking down how the trade happens from a mechanical perspective is another useful exercise.
But also, being humble enough to acknowledge the possibility of it being a problem can make a big difference on its own and help to focus the mind.
Maintain Quality Control In Your Trading Business
It only takes a few bad trades here and there to really impact your bottom line. But when you also consider that these avoidable errors can be the spark that ignites a number of psychological issues, the motivation to avoid them should be strong.
The suggestions I’ve made for doing so can be good advice in general. Making sure you’re doing things properly and maintaining quality control are always going to be important although probably more so when you’ve just got back from vacation.
Make sure when you come back from vacation, you ready yourself for action and you don’t leave your mind sitting on the couch or the beach still enjoying the break.