This is a guest post from Tino @tradersreality. This article originally appeared on tradersreality.com and is reposted here with permission.
It has been a while since I last made a post. So much has been happening, Most of my time was taken completing my book which got released not so long ago. During this time I was not trading so much.
This was actually a blessing in disguise for me.
The problem with being a scalper is this. Everyday that you do not trade, effectively is a missed opportunity to earn. On the flip side, over trading can be detrimental to your performance and lead to emotional battles that happen in your mind, which no doubt leads to money being lost.
What benefit does taking time away from trading have?
Everyone will say, “take a break” or “go back to the lab” “ Stop putting too much pressure on yourself”
Shut the F*** *P.
If you do not dedicate yourself to trading, then you will reap only half measure rewards, to put it bluntly, you will do shitty.
However, taking a break, if used correctly can bring so many positive results.
The demand that trading has emotionally is huge. Anyone that tells you they do not experience emotions when they trade, are lying to you. Saying that, If I have a losing day, I won’t stay upset about it, I simply accept that I could do nothing about it. All I know, my strategy, over a long term/sample size of trades, will come out profitable. So I wouldn’t say I have no emotions, I simply don’t care what the end result of any one trade is.
What’s frustrating is when you execute your strategy, each trade hits the stop loss or you just close it when it fails to move in your favor in your time frame. Now when that happens back to back after several trades, you do, hands down, feel pissed off. Anyone would, but it’s how long you stay pissed off for is where discipline comes in. This is where a break can benefit you.
Depending on your frequency of trading, A swing trader can take a break, although they may only be taking 4 -6 trades a month, he has the problem of sitting through swings that can test their ability to hold a position, or should I say “stomach” to the exposure during trading hours. Ultimately, if you allocate and are committed to your risk management, price can do whatever it wants. As long as your stop is not touched, then all is well.
The benefits of a break boil down to this.
How well do you reflect on your trading, when not trading?
This is where the “staying” power is developed. How are you to survive in this arena if you have not rested?
Alexander The Great, The great invader, never stopped invading, but sure did rest.
Why is it no different to trading?
Your goal is to reflect on the decisions you made during your trading activity. Ask yourself, did you close the trade too soon? what were the motivations to enter? what did you miss? How could you have acted differently?
The idea is to generate feedback on yourself. You can’t do it while trading because frankly your too busy focusing on the trade and what it is doing.
Someone that really wants to improve their trading will critique their performance and explore areas that they can improve.
For example, does your account history show a succession of wins followed by one massive loss? What was happening differently when you were winning and why did you experience that big loss? what did you do differently?
I know for a fact that I remember all my big losses? Bright as day, clear cut. They haunt me every day I trade. The feedback I give myself is awareness…I am receptive to what my behavior was that led to the big losses. When I sense I am heading in that direction…. I SHUTDOWN the computer and I leave the room.
Tino
You can follow Tino on twitter at @Tradersreality and visit his website at tradersreality.com. His new book is The Ultimate Trading Psychology Guide and is available at Amazon.