There are some truths about trading that traders must accept wholeheartedly. One of them, which is the topic of this blog, is the importance of taking a break from trading. Trading, like any other full contact sport, demands that participants take breaks. In football you have defensive and offensive lines. Both lines have a time and a place in which they're in play. In between shifts players are on the sidelines taking both a mental and physical break. That break affords players the opportunity to regain total alertness. Trading is NO different. Generally speaking most sports will be set up the same way. In football, basketball hockey (choose your gladiator sport) you'll have players that play specific positions and that offers great optimization. With that said players, no matter how good they are, have a breaking point (mentally and physically). A great coach will be able to recognize when player fatigue is setting in and that player will be subbed out...again trading is no different! Trading is no doubt a full contact sport and with that said traders need to be their own coach and recognize “traders fatigue”.
Trading fatigue can show up in many different ways. Poor performance is one. Smaller overall gains is another ,taking profits too soon, not seeing your set up correctly, entering too soon, maybe too late etc. Trader fatigue can also present itself in a manner which affects your motivation towards trading. Realistically the list goes on and on. As I mentioned earlier a good coach will spot fatigue when it's setting in and will sub players out. A good trader, or part of being a good trader is recognizing the signs of trader fatigue. When signs of fatigue rear their ugly head it's on the trader to know what to do next. A good trader will have a plan in place to sub themselves out of the market. For myself, I have noticed that trader fatigue typically sets in after a multi month run. After massive returns on individual trades and a P&L curve that looks like a hockey stick my sharpness fades….
like a premarket spiker my late day performance drops.
After years of experience I have recognized this trend and have employed a simple plan. That plan is to step away from putting on active positions, reviewing my last group of trades to see where I'm falling short and to review my actual trading plan. Once I've done that I generally tap into the reality that I'm over extended mentally and it's time to step back. Make no mistake, I'm still watching the market and I'm still actively participating in Ask-A-Trader and Mentoring but my actual participation level in trading is on the side lines. I need that time to reformat my mental state. I know the power of the J. Lewis Trading strategy and so do our clients and students. With that said I also know my own personal limitations when
I'm neck deep in trader fatigue.
Stepping away from the market when you're stretched mentally is great risk management! Don't worry about missed opportunities while you're recharging. Focus more on what you could possibly lose IF you don't take time to recharge. There isn't a sport or a profession where participants don't take time to recharge. Not only is it important but it's imperative.
