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Sharp as a Tack
By Bruce Mushial
What do flying
an airplane, racing a motorcycle and trading stocks have in
common: you'd better be sharp or you're going to get yourself
in serious trouble. Granted it's hard to get physically killed
if you make a big mistake trading stocks, but you can kill
your net worth, your dreams, and your retirement. To trade
you need to be sharp. It doesn't matter whether you are on
the floor of one of the exchanges or sitting in front of a
computer in your home office, you need to frequently take
inventory of how you are doing physically, psychologically,
and emotionally. A stock trader who isn't at the top of his
game physically is going to take some hits right in the wallet.
If you wake up and feel like you need a couple more hours
of sleep, you should be seeing a flashing caution light come
on. A trader who might sit in a chair for hours at a time
has a strange parallel to an athlete. You need to be at your
best when the opening bell rings just like an athlete when
the starting buzzer or whistle sounds. An athlete makes sure
he gets enough sleep, eats right, and gets the proper amount
of physical exercise so he can perform at his best when the
competition begins, and trading IS competition. A trader needs
to eat foods that allow his mind to work not foods that leave
him sluggish and almost comatose. Small snacks during the
day work better than a large breakfast or lunch that makes
you want to curl up and take a nap. A regular regiment of
exercise will release endorphins that can cause you to think
more clearly for days. A trader, like an athlete severely
compromises his daily performance if he drinks other than
in moderation, or partakes in recreational drug use.
A trader that
trades 52 weeks a year without at least a handful of long
weekends away from the market will burn out and perform less
than at his best. If you feel sick, or are recovering from
a medical or dental procedure, it might be a good day to stay
out of the market. You can gain piece of mind and get a chance
to relax in the middle of the day if you alternate lunch times
with a fellow trader, whether in the same location or thousands
of miles away. Carry your cell phone with you to lunch, knowing
the other guy will call you if one of your stocks or the market
in general starts moving one way or the other. This will keep
you from any painful surprises when you get back from lunch.
The trader needs to be sharp mentally and emotionally. The
day after a large gain or loss you again need to see a flashing
caution light. Your judgement is likely to be skewed one way
or the other, and maybe you need to take smaller positions
in the market than normal. Events in your life that have nothing
to do with trading can greatly affect your trading. Relationship
problems with a spouse, in-law, significant other, or child,
can distract you from trading well, just as they suspect talking
on a cell phone can cause car accidents. You don't need to
have an accident while trading. It can cost you a lot of money.
A divorce battle, a seriously ill spouse or close relative,
pending litigation, or business or financial pressures can
cause you to trade more poorly than you ever have before.
By the time the haze clears you now need to dig yourself out
of the financial hole you've gotten yourself into. Instead
it would have been a lot easier to stop trading for a couple
of days or weeks. Every day a trader should take a minute
to evaluate what is weighing on his mind and his body. If
he can clear the distraction, that's great. If not, then he
should consider taking lighter positions in the market or
even consider stepping away from the market until he is again
back at the top of his game.
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