Sir/ Ma’am, Please Step Away From The Computer
Sometimes the survival of our trading account depends on our ability to just walk away but it is just so hard to do. After all, you might lose the rhythm of the market or a huge trend might emerge or worse, the trade you have been patiently waiting for, for days (and you would have been right, right?) will most certainly occur while you are taking that much needed break.
Research shows that our brains get tired, our bodies, feelings and senses are integral to our thinking and that perception is dependent on emotional context.
The biggest secret in trading is that this is a mind body endeavor and not just a mechanical exercise in executing probabilities that are based on some period of historical market action.
If you want to read the market better and make better decisions, the best thing you can do is leave the screen a lot more than you do now (if you already follow this practice then good job). Most new traders have a tough time believing this but many of us found our profits grew as we traded less. When we spend every minute of every day in front of a machine we force things. Boredom takes over and we try a trade just for the heck of it. Our stomach growls because we need food, we ignore it and make poor decisions because our brain doesn’t have the nourishment it needs. Funny story, in addition to OTC stocks, I also trade FOREX which is a 24 hour a day market 5 days a week. One night at about 3am, I was exhausted but couldn’t pull myself away. The trade i was looking for was ever so close to happening and I wasn’t going to miss it. My hand was on the mouse, I was loaded and ready. Instead of knocking it out of the park, I woke up to “Your order has been completed”. I had fallen asleep and when I relaxed the weight of my fingers, clicked the mouse and entered a trade. As it turns out, when the trade went off, the market was moving hard against my position and by the time I figured out what happened, shook out the cobwebs enough to look at the chart and make a decision to exit the trade, I blew up $300 bucks.
Now, $300 bucks isn’t the end of the world, but think about the accumulation of all those losses that come from being tired, hungry, irritable, or all of the above and I promise you will get sick. Many of our losses could have been avoided if we were in the proper frame of mind to accurately judge the opportunity and the risk in front of us.
If you want to book more profits your trading needs to be managed like an athlete that plays both offense and defense. As a coach, I know defense wins championships. When it comes to trading, defense is being away from the screen. Defense gives the offense time to rest, relax and nourish yourself so they are ready to play at peak performance when called upon.
So, instead of buying into all that garbage in paragraph one, start playing defense. If you are sick, tired, irritable, or hungry step away from the machine. Your trading account will thank you later.