Walking Away
I caught Joey Fundora’s post today called It’s Okay to Take a Break From Trading. He brings forth some excellent points, so go check it out. And while Joey primarily addresses backing away when you feel you lack an edge (rightfully so) or when going on vacation, it got me thinking about the times when trading just becomes a little too important, and perhaps even a self-imposed staycation might be warranted.
When the Scales Are Tipping…
Trading is one of those activities that can put you on top of the world, or completely bury you – if you allow it. And by “if you allow it,” I’m not referring to making or losing money. After all, every one of us will have some good trades and some bad trades – that’s not what I’m talking about. I’m talking about allowing trading to be the all-important activity in your life. If it’s sitting on that throne for you, then unfortunately, your daily satisfaction will hinge upon the color of your P&L.
That’s a really tough spot to be in. It magnifies your mood swings from day to day, and honestly, it’s not healthy. It’s no fun either. If you’re driven (as I am), the up day’s don’t carry near the weight in satisfaction as the down days tend to carry in dissatisfaction – regardless of if you’re making more than you’re losing. (Go back and re-read that sentence, because it’s a little confusing if you breeze through, but it’s of utmost importance.)
Stated otherwise, if I’m making good money on my up days and giving back only a portion of it on my down days, I’m net positive. But if I’m allowing my personal happiness to be based upon my performance today (or yesterday or tomorrow), I’m in for a world of hurt. I’m experienced, and I’ve been at this since the 90’s, so I have high expectations. Taking the aforementioned personal-satisfaction-based-upon-P&L approach, when I make money, I’m pleased but I expect to. When I lose money, I’m upset and the mood pendulum swings too far in a detrimental direction.
That’s a mistake which every one of us will at times make – but do not let it become a habit.
Work Hard & Let Go
Trading is hard. Really, truly difficult. Getting paid from your positioning takes real skill and experience, and that means you have to apply yourself to acquire those things. You don’t acquire them without true desire and hard work, which means you’re invested…with your time, your money, and often times your esteem on the line.
Just this week I had a day where I hit my peak of frustration. I didn’t smash any keyboards or scream at my computer or kick the dog, but I was running hot – and I hated it. I carried it with me, and later realized I’m giving trading too much weight. Yes, trading is what I do, and yes I have as strong of a desire to be successful at it as anyone else, but when I let a bad day bring me down the way I did, I’m giving it too much weight. Trading’s an activity, it’s not who I am. I have far too many other blessings in my life to place trading above them, but sometimes I need a reminder.
Maybe you need that reminder today as well – and here you go! Work hard with your trading, aim high, but keep it in its rightful place. As my buddy Bella says, Move On After a Trading Session. If you’re struggling to do that regularly, just walk away until you’re ready to return with a clear head and the proper perspective.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
Are you following me on Twitter yet?
Warrenetta Buffett | Mar 3, 2011 | Reply
This article is absolutely priceless and speaks volume! I love it and will definitely take heed to your message. Thanks for sharing.
suziq | Mar 3, 2011 | Reply
Jeff to mimic what Warrenetta said, thank you for sharing, but even more , thank you for caring.. Excellent insight, that I can personally attest to the ruined lives that can be piled up, by not stepping away, by letting the market be the most important thing in life. It is not more important than family for example. I think of the You tube video that is being shown now of the little baby that is laughing as his daddy is shredding up a paper. Each pull apart of the paper brings joyous laughter that has you laughing right along.. The paper?? Evidentally a rejection letter for a job. But you know what? That babies laughter, makes the point of whats important! Keep the market in perspective!!!
derek | Mar 3, 2011 | Reply
so true, Jeff…and as we know from prospect theory the average person feels the losses 2.5 times worse than the gains. I don’t concern myself so much with losses, but mistakes bother me far more than correct execution satisfies me. still need work on the “who I am” part, thanks for the reminder
Patrick | Mar 3, 2011 | Reply
I have enjoyed your blog for some time, but this is an unusually good post. The metrics of trading shouldn’t be the metrics of our satisfaction with life. Thanks for the reminder.
TheStockBandit | Mar 3, 2011 | Reply
Thank you all for the comments, I appreciate the response to this post!
@ Derek – I’m SO glad you distinguished between ‘losses’ and ‘mistakes’ as they are very different…I couldn’t agree more, and wish I’d included that in the post. Thank you.
@ Patrick – You bet, and thank you for chiming in!
@ Suziq – You’re so correct, and those ruined lives I’m aware of in the trading realm all placed too much importance on it…let’s avoid joining them 😉
@ Warrenetta – I appreciate your kind words, and am glad to know it was time well spent to read! Now that you’ve spoken up, don’t be a stranger!
Peter I. | Mar 4, 2011 | Reply
First of all. LMAO “…Kick my dog,”. This article is perfectly timed. I actually just got back from Cancun on Wednesday and while I was away (Position: 100% Cash). Got backed refreshed caught up with work, noticed your ICO day trade yest and went with it and it paid off! Great article above (refresher) and stock picks. Cheers, off to Vegas for the weekend of shows and food (I avoid table gaming: house wins).
Paul D | Mar 4, 2011 | Reply
I too read Joey’s article today and its just a good point to reiterate. I remember my first FOREX acct went from $800 to $300 in about two weeks because I kept taking trades that didnt fit my entry setup…
TheStockBandit | Mar 4, 2011 | Reply
@Peter – Let me commend you on the 100% cash position while on vacation….only way to enjoy a vacation fully! Have fun in Vegas, and btw, who needs table games when we have trading setups that pay so much better?
@Paul – It’s so easy to force trades, regardless of timeframe or the market you prefer to trade. Good thing it was a small account with which you learned that lesson…coulda been much more expensive. Thx for stopping by!
Matt | Mar 17, 2011 | Reply
The majority of my early trading career saw me surrounded by guys who used to stop-out frequently and smash anything seemingly electronic in sight. We’re not talking like a $400 or $500 stop-outs, but serious down days for some of these guys. My strategy seems similar to yours. Walk away, take a break and realize it’s just an activity and shouldn’t be allowed to have such bearing on your actions. Making money should be as boring as standing in line at your local Starbuck’s. It’s just like play cards, everyone goes on tilt at some time or another. I particularly like your quote “But if I’m allowing my personal happiness to be based upon my performance today (or yesterday or tomorrow), I’m in for a world of hurt.” Look forward to more posts from you Jeff.
Matt
John Ikeda | Mar 26, 2011 | Reply
Enjoyed the post. Had a really bad day the other day. All self imposed. Lol. It’s good to know that sometimes it’s good to just take a break. Thanks for the post!
John
TheStockBandit | Mar 27, 2011 | Reply
Hey John,
Great to hear from you again, I trust all is well. Thanks for stopping by and reading, hope to hear from you soon!