Date: 11/28/2022
Author: Chris Hood
Never trade when you’re tired, hungry, or bored.
It’s a piece of advice I give to all my clients because your emotional state directly affects your trading ability.
The first two are reasonably self-explanatory.
Think about it. Can you do anything well without sleep? No. There’s even scientific research that shows sleep-deprived drivers, up to a point, are more dangerous than those who are legally drunk.
Math mistakes, order entry errors, and blurry chart lines.
None of these help your P/L statement.
Likewise, as a proponent of intermittent fasting, I know how blood sugar can cloud your judgment. Foggy-headed, irritable traders make rash, emotional decisions.
Your brain runs on glucose.
Eat something before you sit down at the monitor or suffer the consequences.
However, of the three, it’s boredom that destroys most new traders. After all, if you’re a trader, you’re supposed to be doing something…right?
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Maybe, maybe not.
Fast markets can be exciting. Parabolic runs, dramatic drops, scrambling to get orders as fast as your existing trades close.
The financial equivalent of Allied Forces storming the beaches of Normandy strafed by machine gun fire and pounded by artillery.
However, the reality of trading is much, much different.
A good portion of the time, excellent traders do nothing at all. They place their trades, set their autoclose orders, and go about their lives. Great trading is often extremely boring.
Nothing is to be gained at all by staring at the screen during a grindingly slow, sideways market.
And in uncertain, volatile markets like this one, watching positions too closely can lead you to make management decisions based on the wrong charts.
If you place a trade based on the daily chart, decisions based on the previous day’s close should guide you.
Did the stock trip your stop loss?
Or is it still trading within the range you decided upon when you entered the position?
Check the charts at the end of the day and follow your plan the next morning.
Entering ill-considered trades to have something to do isn’t wise. Create a plan and follow it, trying to make your weekly or monthly profit goals with as few trades as possible.
When you have too many open positions, it makes paying close attention to each one difficult.
Find the balance of trading volume that allows you to reach your profit goals without creating undue stress. Trading is much better when you stay in your comfort zone.
I can help you build your plan in our Trade Command live trading room.
A unique combination of alerts, education, and community for those who genuinely want to learn how the options game is played.
Hope to see you there.
Cheers,
Chris Hood
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