After a wild couple of weeks, I decided to take some time off Friday away from the charts.
It’s something I do every once in a while to clear my head and recenter myself.
In fact, I told my LottoX members that I was taking Friday off to stop myself from overtrading.
And when it’s time to return…
I ease back into it.
We all take time away from the markets for various reasons – vacation, family and work obligations, overtrading, burnout etc.
So how do I get back in the game as seamlessly as possible?
I create a plan which gets me up to speed with what I missed by answering a series of key questions.
It might sound like a boring process…
However, it’s how my account has consistently grown over time.
Famed investor Peter Lynch was vacationing in Ireland when Black Monday hit in 1987. That’s got to be tough to not think about.
All I did was take Friday off. Yeah, it was a bullish day, but nothing like that.
Don’t just assume that nothing happened while you were away because the S&P 500 only gained 10 points. There’s plenty of action that could occur in certain sectors.
Most of my LottoX traders know that I’m partial to momentum stocks. These trade wide enough ranges to make profitable option plays.
Before I jump back into things on Monday morning (or any day that I return), I do a few things with some of my favorite stocks to trade.
- Look at the price action for the time I missed plus a few days at various timeframes. I want to see how it traded compared to the rest of the market. Did it show relative strength or weakness?
- Do the same exercise with the broader markets and market internals. See if there are any points of weakness or strength that stand out
- Find any setups that look particularly interesting and mark them down.
Going through these steps helps me settle in and get a feel for the rhythm of the market.
I realize how esoteric this may sound, but part of trading is art that comes from a honed intuition.
One of the most common mistakes new traders make rushing back into the markets is keeping their trade size the same.
Imagine if you were a weight lifter. Would you try to lift your heaviest amount cold turkey, or would you get warmed up first?
Trading is no different. You want to work out any kinks and refocus yourself on the tasks at hand before taking on big risks.
I also like to spread my trades out over time. Rather than starting off with a bunch of plays at once, I prefer to take a couple, wait a few hours, and then search for some more. Doing that prevents me from overtrading right out of the gate.
Define your strategy
Returning to trading is a lot like starting from the beginning. The major difference is that you work through the steps a lot faster.
As much as you think you know your strategy, it never hurts to reaffirm the core components.
For me, my TPS strategy is the framework for nearly all of my LottoX trades.
So, to make sure I’ve got a good handle on things I go through the following for each of the three components.
Trend – I’ll sift through the charts I mentioned above and make sure that I identify which have strong bull or bear trends and which are trendless. Sometimes I’ll pick a few random charts just to test myself.
Pattern – Chart patterns can be subjective. So, I’ll not just go through current charts, but past ones as well to make sure I can still identify what I saw then. Every so often, I’ll catch myself second-guessing my original ideas. That’s fine. I just mark those thoughts down and come back to them later.
Squeeze – Especially in this market environment, I want to see how squeezes have been forming on different time frames as well as how they release. Are they working better on shorter time frames or longer ones?
On top of reviewing the core components, I’ll brush up on my entry and exit strategies and techniques. If I’ve been away from the markets for an extended period of time, I often find that I’ll need to make a few adjustments here and there.
All of this I teach to my LottoX members on top of streaming my trades live, every day.
Not only do they get to see what and how I’m trading, but each week I hold a live training session to walk them through various techniques and strategies, helping them become better traders.