If you’ve been reading this blog for a while, you know that I’ve shared many of my own lessons learned over the years. At this point, I’ve been trading full time for 16 years and counting. I’ve made every mistake imaginable – some more than once. As much as I value my college education, nothing I learned could prepare me for the daily battles I face as an options trader. I’ve had to take a break from trading on occasion, and I’m here to tell you that it’s OK.
Trading is exhilarating and exhausting
I love trading. I love the excitement and the challenge of deciphering the charts and technicals so I can earn a living. I’m always asking myself, “Do I have an edge? Can I make money today and build my wealth for the future?” I put my skills to the test every day. Usually the outcome is good, but sometimes it’s … not. At times, I’ve wanted to beat my head against the wall. “How did I misread the signals?” I mutter to myself.
Sometimes you’re the hammer, sometimes you’re the nail.
In order to be the hammer, I rely on charts, technical indicators, sentiment indicators and time-tested historical data. Analyzed together, I can create a nice story about the future action in a stock or index. This has been my go to approach for years, and I have been mostly successful (I even wrote a book about it!).
However, just because I think I have clear view of a trend doesn’t mean that my trade will be successful. Sometimes stocks don’t move when I want them to. Sometimes a black swan event (hello pandemic) throws everything into a tailspin. Unless I act quickly, my once promising trade could lead to a loss if I’m not careful.
It’s OK to take a break from trading
A few losses can lead to a trading slump. I’ve been there many, many times. When this happens, it’s OK to take a break from trading. Step back for a few days and observe. You can learn just as much from watching the action with little or no risk on the line as you can actively trading.
Trading options for income is not the easiest way to build wealth. It takes hard work, discipline and extraordinary preparation just to survive. Profits can be ripped away from you in a split second if you’re not careful. Taking a break allows you to return to the action in a much better place mentally, emotionally and financially.