Take a Vacation and Fully Relax
Did you have a nice three-day holiday? Trading is stressful. Day in and day out, you have to skillfully conquer setbacks, ride through waves of emotional ups and downs, and start each trading day as if it were a fresh, new day. Over time, it takes a psychological toll, however. Eventually, you have to take a break, relax and reenergize. But it's often hard to just walk away from the markets. In "Reminiscences of a Stock Operator," for example, Jesse Livermore had trouble walking away from the markets, even when on vacation. While fishing or just visiting a resort far from Wall Street, he couldn't fight the urge to visit the local brokerage and check out the market action. If often lured him in. Sometimes he made his biggest trades while on vacation, and sometimes he realized his greatest losses. For Jesse Livermore, trading often seemed more like an addiction than merely a way to pay the bills. Such compulsive behaviors will eventually lead to burn out if left unchecked. To preserve your mental health, it's vital to remove yourself from the market action.
Many professional traders keep open positions while on vacation, and continue to monitor those positions even when they should be resting. But, psychologically speaking, it isn't a very good idea to continue trading while on vacation. Your mind can't fully relax. You'll continue to wonder how your positions are doing. And if you aren't fully relaxed, your mind can't rejuvenate.
When you go on vacation, it's useful to close out your positions. It may require that you plan your vacation so that you can postpone putting on trades that you can't close out before leaving on vacation, but it is useful to find a way to close out as many positions as possible so that you can feel completely free while on vacation.
If it is impossible to completely close out your positions, you might consider asking a trading partner to monitor and trade your positions for you while on vacation. If you chose this option; however, you must be willing to accept the decisions of your trading partner.
Vacations are vital for your psychological health, but you cannot truly rest and relax unless you can genuinely put work aside. That's hard to do with open positions. Developing a plan for truly leaving your trading behind you will allow you to get the rest you need and return to the markets refreshed.
A couple of comments on the above:
- If you want to read Reminiscences of a Stock Operator online then click here.
- If you are trading OPM (Other People's Money) then your client mandate may require you to be fully or 80% or whatever invested in a certain market. It's very difficult to leave the market in that situation - or even hand it over to someone else to look after - especially if part of your remuneration is contingent on the performance of your portfolio.