We’ve all done it.
Take some time off… come back…
…and start firing off trades— only to get eaten up by the market.
It’s amazing how easy it is to get out of sync after a short break.
With tomorrow being a market holiday, I figured now is a great time to share with you my strategy to staying sharp after a layoff.
Taking A Break
There are 9 market holidays per year and you should definitely take some longer vacations beyond just those days.
We all need time to re-set.
But the market doesn’t wait for anyone.
So if you aren’t ready for trading when you get back from a break, you could really put a dent in your profits for the year.
But with these simple steps, you can get back to trading on the right foot…
What did the market do while you were gone?
Simply read the headlines that moved the markets and take a look at any individual big movers while you were out.
Find out what’s been moving the markets and get a feel for the current mood.
And of course check out any stocks you normally trade or the ones you are watching.
Take some time to analyze the charts.
Look at the moves… did it hit any support or resistance levels, any moving average crosses, what was volume like on the moves, etc…
Simply analyze the chart as you normally would.
This will get you back in the feel of the market as if you were never gone.
Now that you are caught up, make a plan.
This is no different than any other trading day, so why would you ever think about coming out of a break without a trading plan.
Stick to your normal strategy when looking for trades and plan your trades for the next day ahead of time.
Whether coming off a break or not, you should never go into the trading day unprepared.
If a trade doesn’t’ set up, don’t force it.
Lower Your Risk
If you don’t feel comfortable trading, lower your risk… or just don’t trade.
Stick to your best setups, don’t hesitate… but take less size.
That always helps me when I come off a break, or a losing streak for that matter.
Lowering your size until you get back in the flow is one of the best things you can do. It allows you to trade through the hiccups without getting slaughtered.
And if you’re really feeling out of sync, there is nothing wrong with sitting out a day or two of live market action to get back in the flow before placing any trades.
You could even paper trade to remember how it feels when the market is going against you and get readjusted to the emotions related.
And that brings me to the final technique…
Step In Slow/ Take A Pause
Simply take less trades.
You can do this by focusing on the very best setups only.
Being a little less active gives you time to take trades and gain the confidence back before going heavy again.
And if at any moment you feel uncomfortable, just take a pause.
Review your plan and stick to it. When in doubt or if you get emotional, get out.
And take the time to clear your mind and re-set.
Coming out of a break can go one way or the other.
To make sure it’s a smooth transition…
Master your emotions by sticking to your rules.
Have your entry and exits planned out ahead of time. And stay emotionless.
Using these techniques has always helped me come off of a break from trading.
To learn more about what makes me successful as a trader,