Tag Archives: Fatigue

You Don’t Have To Trade EVERYTHING

 

This chart is from Thursday 19th March 2020. A couple of quick trades and then STOPPED. Done for the day.

<image: Two winners - and stopped. Why?>

Why stop?

Because today was a Hit & Run day!

Trading is a performance activity. And it's our job to manage ourselves in an attempt to get as close to peak performance as possible.

Good sleep routines, healthy eating, exercise. And some degree of separation of "life issues" from our trading day.

All good… and fairly easy… until a pandemic is unleashed across the world.

I expect most of us will be operating with heightened levels of anxiety and stress at the moment. I'll be the first to admit that this period of time has been harder on me than I expected. Having two daughters working as nurses provides an interesting mix of pride and anxiety right now.

The markets of course do not care at all how we're feeling. So it's up to us to manage ourselves. Limiting exposure at times when we're unlikely to be on our game. And pushing hard when we are feeling at our best.

Here's how I've chosen to manage my trading over the last few weeks.

Pre-session preparation includes an assessment of my current physical, mental and emotional state. And selection of one of three ways I need to approach the markets today.

1. NO TRADING

My physical state require strict adherence to my 5/12 fatigue management rules. If I have not had sufficient sleep, then there is NO trading.

And for my mental and emotional state, if there are any serious and unresolved problems or anxiety or any other type of distraction, impacting either myself or any member of my immediate family, then there is NO trading.

It's time to step back. Sort myself out. And come back again tomorrow.

The fact is that we don't have to trade EVERYTHING. Let today go.

I'm here for the long haul. I expect to be trading for decades to come. If I miss one day, who cares. It will not make or break my career.

2. FULL TRADING

The majority of days though, I'm completely fine. Sufficient sleep, feeling fit and healthy. And feeling in control of the current crisis (at least as it relates to my extended family).

It's time to trade.

Pre-COVID-19 routine: 0930 to 1100 compulsory trading, 1100 to 1200 optional trading.

Current routine: 0930 to 1100 compulsory trading, 1100 to 1600 optional trading but compulsory engagement with the markets, watching and learning.

It's time to trade.

FOCUS.

Press hard when in sync with the market. Step back a little when out of sync.

But make sure you're fully present and attacking whatever opportunity comes your way.

3. HIT & RUN

This is for those in-between situations. The shades of grey that fit somewhere in-between "obviously unfit to trade" and "hurry up and open the damn markets because I want to trade".

I've had a few of those days lately. I satisfy the fatigue rules. And I'm not overly consumed by current events of the world.

But I feel a little down. A little flat and deflated.

The plan here is for a shortened session. Hype myself up. Get in and attack the market. And then get out.

Hit and run.

And then take some time out for personal rest and recovery.

There are many ways to do this.

I've informally adopted the following plan:

(a) Trade the opening sequence.

(b) If I'm sitting on a loss then stop. Take the hit. Don't risk making it worse.

(c) If I'm sitting on greater than 2R profits then stop. Take the money and don't risk giving it back.

(d) But if somewhere in-between, I'll allow myself to make a call here based upon how I feel. Either take what I've got, or push on for one hour maximum to see if I can get to the 2R target.

Why one hour? Through personal experience I know I can hype myself up to focus sufficiently for about an hour. But beyond that, motivation starts to drop. Maybe you can do more?

The important point here… again… is that you don't have to trade everything.

If the market offers tremendous opportunity after that opening sequence, or opening hour, who cares.

It's not going to make or break my career. And given my low motivation I probably would have stuffed it up anyway.

So let it go. Take a break. And have a little "personal time".

Typically I find this is sufficient to have me back to 100% the following day. A short break from the markets can do wonders for reigniting the passion and having me eager to get back into the ring for another round of action.

Let's revisit the earlier chart…

<image: Two winners - and stopped. Why?>

<image: Two winners - and stopped. Why?>

The obvious thought here is "But Lance, you missed so much opportunity!"

<image: Two winners - and stopped. Why?>

Another "Hit & Run" day, on Tuesday 24th:

<image: You don't have to trade everything>

You might recall this opening trade from the social media post on Wednesday. If you were wondering how that trade turned out… now you know!

<image: You don't have to trade everything>

<image: You don't have to trade everything>

<image: You don't have to trade everything>

There are days when it is obvious that you shouldn't be trading. Stand aside. Let it go.

There are days when you're feeling great. Keen to get into the action and face the challenge of the markets head on. Go for it. Trade.

But there are also in-between days. When you're just… ok. A little flat. A little lacking in motivation. The last thing you probably need in such a situation is a full session of trading. So shorten it. Reduce the session length. Accept smaller profit targets. And get in there for a quick hit and run. Smash and grab. Two or three trades. Get a profit if you can. And get out of there.

You don't have to trade EVERYTHING. Let it go. And take some time out for YOU.

Take care of yourself. We're in this for the long haul.

Lance Beggs

 


 

When Fighting the Trend… (Part Two)

We finished up last weeks article (which you'll find here if you missed it) with the following image…

fighting the trend

Well, my post-session review did consider this question.

In fact, the answer was obvious to me even as I traded the session. I knew I was fighting an obvious uptrend from maybe the second or third trade, and yet I still didn't flip my bias and operate LONG.

Why?

(more…)

My Biphasic Sleep Experiment

Life… the stuff that gets in the way of your trading!

I know that everyone has difficulty at times fitting their trading in and around the rest of their life. Especially if you’re still working a full-time job and raising kids at the same time.

But seriously, I can’t imagine a much worse time-zone for daytraders than the east coast of Australia.

With the best choice and opportunity available during the UK and US market hours, that means either trading in our evening or overnight.

The UK forex hours (8am-5pm GMT) are equivalent to my 6pm – 3am, the best part conflicting with family time (dinner, kids homework and never-ending trips to and from soccer training, keyboard lessons, guitar lessons etc etc etc).

The US emini hours (9:30am-4:15pm ET) are equivalent to my 12:30am – 7:15am. That’s a killer.

Not complaining, mind you. I wouldn’t ever trade this problem for a ‘normal’ job. And I accept their are some liquid markets in my normal daytime (SPI, HSI for example). I just haven’t found them to my liking. So, I accept it’s all my decision to live with this problem.

For a long time I just forced my trading onto my family. Trading time was my work time. They came second. This obviously was not a wise plan and I consider myself incredibly lucky to still have a family.

So now I place family first and select trading times that fit around other family responsibilities. Early UK market hours are only traded in small blocks of no greater than two hours, ONLY if family responsibilities allow me to trade at that time on that day, and ONLY if volatility is expected such as at the open or in the period immediately following a major news release. The bulk of my trading is therefore done once the kids are asleep, in either the forex UK/US overlap, or in the emini futures.

That’s the best solution I’ve found so far for still allowing family-time. The side-effect though is that it increases the amount of ‘night-shift’ trading leading to even greater danger of fatigue induced error.

I’m well aware of the dangers of fatigue, from my previous career as a pilot and aviation safety specialist. In fact, I’m the only trader that I know of who has a fatigue management plan (see this article for an intro to the concept: https://yourtradingcoach.com/trader/trader-fatigue-management/)

The 5/12 rule discussed in the above article is designed to ensure I minimize the likelihood of trade error due to acute fatigue. If I don’t meet the 5/12 rule requirements, I don’t trade.

Great in theory…

When it comes to putting it into practice though, I’ve seriously let myself down and often do trade with less sleep. It’s easy to rationalize at the time – life just doesn’t allow me to get that much sleep, say for example when I trade till 3am, get to sleep by 4 and have to be up at 8 to drop the kids to school.

End result – one very tired trader.

So, here’s my latest plan – a four week trial of a biphasic sleep routine.

A few definitions:

Monophasic sleep is how most people do it. One sleep phase per 24 hour period, usually a single block of around 8 hours +/- 2. Sounds awesome, but not possible for me.

Biphasic sleep involves two sleep phases per 24 hour period, often one longer one and a shorter one. I guess it’s like having a main sleep, plus a nap, just formalizing the nap period and ensuring it happens each day. Siesta time!

Polyphasic sleep involves greater than two sleep phases per 24 hour period. Say for example 5 hours awake and 1 asleep, repeated four times in 24 hours. That is perhaps a bit extreme for me right now.

I first came across this concept a couple of days ago, after discovering a press release from a University of California study (http://www.eurekalert.org/pub_releases/2010-02/uoc–amn021110.php) in which the findings “suggest that a biphasic sleep schedule not only refreshes the mind, but can make you smarter.”

I like that idea. I feel smarter already, just knowing what monophasic, biphasic and polyphasic mean.  🙂

Looking at further research on the net, and testimonies from others who have adopted this lifestyle, it appears that further benefits are an increased alertness, focus and the requirement for slightly less total sleep.

The downside appears to be increased feelings of fatigue for the first week or so of the trial (no different to status quo) plus the fact that sometimes life doesn’t allow us the opportunity to take our second sleep (some flexibility may be necessary, to adjust the schedule as required).

My wife already thinks I’m strange… so there’s no further downside in that department.

Ok, my plan…

(more…)

Trader Fatigue Management

Fatigue management is a favorite topic of mine, due to my interest in aviation and in particular aviation safety. In military aviation, in both a training and operational environment, fatigue management is recognized as an essential function of command, in order to minimize risk and enhance operational effectiveness.

The same applies to the management of your trading business. As a trader, fatigue will reduce the quality of your work – your preparation, your market analysis, your trade execution, your trade management decisions, your focus, your patience, your ability to psychologically accept a loss and your ability to stick to the process of trading.

Here’s a great quote on the dangers of fatigue, sticking to my military theme.

“Some of the COs were awfully heartless and brutal. A few had no idea about how to command men or judge a soldier’s capabilities. Too often they would order young boys to lug a dead weight for miles, and when the young fellows reached the front they would be too exhausted to fight. I have seen them in tears, too tired to struggle on. They furnished an easy target for enemy gunners. More than one frail, green kid got cut down due to such incompetence in officer’s ranks.

…PTE Vincent E Goodwin, WWI Diary

Ok, you’re not at war and your life is probably not at risk from the markets, but the results can still be devastating.

As a retail trader, you’re CEO of your own trading business, as well as the trader. As CEO, are you pushing your trader too far, trying to achieve too much too soon, without sufficient time for rest and recuperation? If so, if not managed properly, the results can be financially devastating.

Life is tough. There are many demands on an adult. For many of us, on top of a full-time job and a full-time family, we decide that we’re just not happy and need to work at developing another income stream to replace that job we despise. For varying reasons, often the allure of easy money, we’re attracted to the financial markets, and before we know it we’re burning the candle at both ends – effectively working at a third full-time commitment.

Being so busy, sleep is the first thing that gets sacrificed.

But how does that affect us, and our trading results?

(more…)