Taking a Break From Trading – by Erich Senft, CTA

There’s nothing wrong with taking a break from trading every now again. I’m not talking about taking a year off or anything like that, but sometimes leaving the charts alone for a day or two will make a big difference to your trading performance. This is a big hurdle for many traders to overcome because they think they need to be in the markets all the time or at least monitoring them continuously so that they don’t miss out on any “big” moves. While this might seem logical on the surface it doesn’t usually work this way.

Most of us need a break every once and a while. It seems that life is getting more and more hectic everyday with ever increasing demands from work and home. Try to squeeze in some trading time into the mix and it’s easy to get sidetracked into a workaholic state of mind. While you might think you can handle it, being too busy can actually be detrimental to your trading results. This is a lesson I learned some time ago.

As you know I watch the markets everyday and have done so for many years, but occasionally I need to take a break, even if it is only for a day, in order to regain my focus. Watching the markets every day can lead you to a type of tunnel vision where you lose focus of what is actually happening on the charts. This is precisely why I am not able to watch the markets tick by tick during the day. Being that close to what is happening on the floor usually leads me to incorrect decisions or worse, tweaking my trades too much.

Have you ever noticed how certain trades seem to jump right off the page at you when you first look at a new chart? Don’t believe me? Pull up a Natural Gas chart or maybe the EuroFx and see how “clear” everything seems to be. This is not because these markets are making better setups than the ones you usually follow; rather it is because you are looking at these charts with a “fresh” pair of eyes. Following your regular markets day in and day out can lead you to lose sight of the bigger picture which can often lead to bad trade decisions.

The only way I found to correct this problem is to actually step back and take a short break from the markets. Often I only need a day away to regain my perspective, but at this time of the year we have a perfect excuse to take a break and not feel guilty about it. The week between Christmas and New Year is traditionally a very quite time for the markets. Unless there is significant fundamental news driving the markets (like the Mad Cow scare from last year), chances are good that nothing significant will happen during this time as many traders simply take the time off.

So I encourage you to take some time on occasion and “recharge” your batteries. You’ve heard it before, but it’s true that the markets aren’t going anywhere. Besides, your trading is likely to improve as a result.