Managing Trader Performance and the benefits of holidays

Hello traders,

I’m back from a couple of weeks away from my desk and the markets. I’ve been lucky enough to enjoy some late winter sun in Majorca.

Whilst many of you know that trading can be a lonesome endeavour it can also be an all-consuming one as well. It’s very easy to get drawn into the markets to the exclusion of everything else. (I know I’ve done it many times.)

It’s also true that trading can be a very draining experience – especially for intra-day traders. Even if you don’t take a trade you have a day of sitting on the edge of your seat waiting for your set-up. That in itself takes its toll (before we even get into managing trades, losses and clusters etc).  With that in mind I have 3 points to make for all traders:

1. Holidays / mini-breaks

It’s with that in mind that I advocate that traders should have breaks scheduled in their diary. For those engaged in intensive intra-day trading there should be long weekends pencilled in every 4-6 weeks. There should also be a one-week down period pencilled in for every quarter. There should also be at least one complete 2 week break pencilled in for every 6-12 months.

All of those guidelines are to help a trader manage themselves – to help keep them performing well and avoid burnout. Remember trading is a performance activity so you want to be in a good space to be able to deliver consistent performance. You owe it to yourself (and your clients if you’re a money-manager) to operate at your best. This is about managing yourself for the next 5-10 years – not about trying to have one great trading month.

2. Unplug yourself

Furthermore what I can also heartily recommend (from recent experience) is to completely unplug from everything and everyone. By that I means completely closing down shop; no emails, no internet, no work calls, no work related reading etc etc. During my recent sojourn once I had told everyone I’d arrived safe and sound all my electronic devices went into the safe and stayed there. No checking Facebook or WhatsApp, no texting people or answering emails. Just completely unplugged. I also didn’t watch any TV or read any papers. Nor did I read any trading books or journals either. Just a complete break-away for a short period of time. And you know what? It was bliss.

In the distant past I have tried to multi-task and tried to work and holiday at the same time (try marching to the top of Bray Hill in Cornwall at 6 am to try to get an internet connection on your laptop so you can phone/place your orders) or have let the final portions of major trades to run whilst I’ve gone on holiday (there’s a target and a stop-loss in place. What can go wrong? I’ll tell you what can go wrong: North Korea delivering an unexpected nuclear weapon test….when you’re short USDJPY! That’s what can go wrong).

3. Your skills are perishable

After a long and happy break its easy to return to your desk feeling refresh and rejuvenated (which in itself probably tells you that the break was long over-due!) What you do have to watch for is that your refreshed self doesn’t wander towards euphoria and over-confidence. These are never positive states from which to trade from.

You have to remember that your trading skills are perishable (especially intra-day traders) and that when you take a break those skills will have degraded. You should not be flinging yourself back into your trading with size and intensity on your first day back.

You don’t see Fighter Pilots engaged in complex dog-fights on their first day back at work. Nor would you see Lewis Hamilton expect to just jump into his F1 car and deliver a searing lap on his first day back. Nor would you expect the same from Usain Bolt or any other major performers, regardless of their field. And yet I see and hear of traders coming back into the market trading at the same size and intensity as before their break and struggling.  There is no need to do this to yourself. Spend your first day or two working yourself back into a good routine and if you do trade it should be at small size until you’re back into the rhythm of the market.

It takes a few days to get back into the speed of work (as can be proven by my sending this blog post out only half-written with a fat-finger mistake. Clearly I’m still in holiday-mode! Though sooner a blog post be the result of my fat-finger rather than a bad trade!)

So take a look and see what if any breaks / holidays you have lined up in your diary. If there are none, then get planning. Here’s a simple and top-tip trader performance tip. If you’ve lost the appetite for filling in your trade journal, or your trading discipline has been sloppy – that’s probably a good sign that you need a break!

Trade well!

Paul