Friday, 13 November 2009

Do I Have to Dance All Night

I don't know how many of you know the song in the title to this blog by Leonard Cohn, but it kind of matched the question for the blog today:  Do I have to trade all day?
The answer depends upon your trading plan. Let me tell you how my trading plan works. 

Those of you who read the blog know that I moved to London to be in the best time zone to trade. in the middle of the US, European and Asian timezones. You can only earn as much as the market will allow: it depends on volatility.
You can see from my charts and the trading results that, in the current volatility, I trade about 5 times a day, starting early before RTH in the U.S., and stop when I have made around $1,500 per 3 contracts.

There are a number of reasons for this: I know that every time I put a trade on I am assuming risk; I want to trade the major swings or sequences of the range bars I trade. I stop trading when I am tired. I know that the opening and closing of the market provides the best opportunities.

So I now trade (ES or Dow Euro 50) when London opens (about 2am New York time but 7am in London). I may take a break for an hour or two before the NY open at 2.30pm but not if there is action. As soon as I feel my focus fading I stop. I could start again two hours before the NY close, but only if I have not made enough money for the day.
I won't trade if I feel tired or ill or just off my game. I won't trade if I am distracted or upset. I take breaks during the trading day when things are quiet and walk my dog, Sammy - she's a rescue jack russell of unusual intelligence. 

Trading is the focus of life for me as it is what earns me my living. However, it's important to disengage regularly and do other things so you can refill your trading batteries. I love to travel and being in Europe gives me opportunities to go everywhere, which we do. Kiki fences to burn off her trading stress and to keep fit which gives her more trading energy. My female Zorro.

So the answer to the question of "do I have to trade all day" is: No.  Find a rhythm of trading that works (= is profitable) and suits you mentally and physically, always allowing it to be tweaked day to day to fit the market's rhythm.

Click to enlarge

1 comment:

  1. First off let me thank you for a brilliant blog. Let me also tell your daughter just how lucky she is to have such a terrific Dad (I'm sure she already knows though). My question is are you still coaching people (outside of this blog) and if so how can I become one of your students? I've been struggling for a few years now and after reading your blog I know you are one of the very few real deal traders out there and I love the simple concepts you teach, they just make so much sense.