Step Away from the Laptop: Is It Time for a Vacation from Forex?
12/10/2014 9:00 am EST
Casey Stubbs of WinnersEdgeTrading.com outlines the benefits and the importance of taking a break from forex trading so as not to burn out and he outlines five instances for when it behooves traders and their accounts to take a moment of pause.
Do you fall asleep counting candlesticks instead of sheep? Is your alarm clock set to go off when the Australian market opens on Monday? Did you just miss Thanksgiving dinner because you were reading up on the OPEC conference scheduled to take place the next day? If you answered yes to any one of these, you need to step away from your trading platform. Did you answer yes to all? Then you are in need of a serious forex sabbatical.
What’s Wrong with Being Obsessed with Forex?
There is something wrong even with wondering that. Yes, success comes by knowing your craft and honing it to perfection, but even the most dedicated trader has to take a break now and then. If not, you will start to feel the effects of forex burn out, which not only hurts you physically and socially, it will start to show in your profit margin as well.
All joking aside, the biggest sign that you need a break from trading is a sudden change in the number of positive trades you are able to pull off. Not taking breaks makes you start to look at every trade in the same way and forget to check for the indicators that make them unique. Or maybe it isn’t that you are forgetting to check, it is just that after too long, everything can start to look the same.
If you are not hitting the right amount of good trades then it is time for you to take a break and clear your head before getting started again.
Other Times to Take a Break
- Before Big Personal Commitments: One of my biggest forex fails happened about a month before my wedding. My mind was so focused on tuxes, limos, and honeymoons that I completely missed an obvious indicator that ended up costing me a big chunk of my forex account. If you have a big event going on in the near future that is causing you to be distracted, use that as your excuse to take a break. Whatever it is you are planning will be that much better executed with your full attention, and your forex account won’t suffer any damage.
- During the Holidays: We are right now edging up to the slowest time of the year for the forex market. Take full advantage of it by pulling out of forex for a week or two. The market is still going to be there in January, and with a clear head, you are going to be ready for it.
- At the Cusp of Major Financial News: The OPEC conference in Vienna was huge in terms of the value of certain currencies. How it played out would, of course, affect the dollar, not only the US, but the Canadian too. When you have big news like that on the horizon, bring your money home and wait for the dust to settle before making your next move. There is no way you can predict the outcome from financial news like this, making it impossible to predict the movements of any one currency pair as a result.
- Other News Days: Monday is typically slow in regards to reports being issued, making that the perfect opportunity to enjoy a three-day break from trading. Especially after you have had a rough week prior.
- After a Big Loss or Gain: Major losses and victories in forex both work at upsetting your psyche which can lead to emotional trading. On the losing hand, you begin to make revenge trades or desperate ones in hope of winning that money back. The winning hand may get cocky and think that anything their strategy touches turns into dollars. This will cause you to stop being cautious in your trades. Taking a break will allow either of those emotions to die down before you start trading again.
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What Do You Do Instead of Trading?
I know some traders will claim to take a break, all the while just studying and waiting for the market to move in a direction that suits their trading strategy. That’s not taking a break, that’s just waiting out unfavorable market trends. A break is when you don’t look at your platform, don’t read any reports, and don’t chart any graphs.
It is not always easy, especially if you work or play with other traders who are happily letting you know how well they are doing during your forex time-out. Either stay away from these guys too during your break, or learn to tune out the forex noise. Focus on your other hobbies and if you don’t have any, start one. Spend some quality time with your family or put some of your forex energy to work at your other job if you have one.
What is the Benefit?
Taking a break from forex gives your brain a rest. It is that simple. Remember trying to learn algebra in high school, when the numbers would not make any sense to you? After lunch, you would re-open your math book and a light bulb would go off. Suddenly it all fit together the way the teacher told you it would.
The same happens with forex. After looking at it for too long, all of that data starts swirling around while your brain tries to make sense of it all. By the time your break is done, your brain would have processed it and is able to give you a fresh perspective of how it all works together.
Employees at every level are given paid vacations for a reason. Take that same approach to your forex trading to keep yourself fresh and on top of your game. In the end, that time off is going to show in big returns for your forex account.
By Casey Stubbs, Founder, WinnersEdgeTrading.com