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I know what you are thinking: “the market is not open on Saturday and Sunday.” You are indeed correct and I am not living on another planet [Believe it or not, there was a time, during the 1930s-1950s, when the stock market was open on Saturdays!].
What exactly do I mean when I warn traders not to trade on Saturday and Sunday? Simply put, traders have a tendency to carry thoughts of their previous week’s trades into the weekend. The result can have devastating consequences. Let me explain.
A WEEKEND BIAS CAN TURN INTO AN UNPROFITABLE MONDAY
You can carry a bias into your trading on the following Monday (or Tuesday if a holiday) which can negatively affect your trading results. Your bias can be based on the following:
1) you missed several opportunities to trade based on your set-up (edge) so during the weekend you determine that you will not miss a trade on Monday. You have now set yourself up to force a trade. Forcing a trade will cause you to do exactly what you do not want to do: lose money!
2) you lost money last week and all you can think about is how you are going to have to make up that loss. So, the first trading day of the week you load up on your first trade in order to win it all back. This trade will be the one that costs you more money. Funny how the market can giveth and taketh away [and taketh away…].
3) you made money last week. In fact, it was one of the best weeks you had in a long time. You are now a market god! Unfortunately, this is where the market can do the most damage to your ego and to your account. There is more than one kind of “head fake” in the market and it has nothing to do with a stock pattern. Keep your head about you or it may just be taken off.
KEEP THE DOOR CLOSED ON THE WEEKEND
Trading on the weekend opens the door to doubt. As in the examples above, you may doubt your trading rules (edge) if you had a losing week. So you spend all your time on the weekend buying new books, changing your trading rules, questioning whether or not you have what it takes to trade, etc. when all you really need to do is walk away from your trading floor, both physically and mentally and be content with your HAPPY ZONE.
RELAXATION: THE OPPOSITE OF STRESS
By not trading on the weekend you reduce your level of stress. Take the STRESS TEST FOR STOCK TRADERS and see if you pass. There may be a reason why you cannot enjoy your weekend with your family and friends! Most likely the reason is not found in your flawed analysis but in your attempt to do the impossible: trade on the weekend!
Take a look at your trading log and see if you find a pattern in your trading that reveals greater losses at the beginning of the week than at the end, or more on Monday than the rest of the week. You look for patterns in the market to exploit, so why not look to exploit the patterns in your behavior as well??
“If people concentrated on the really important things in life, there’d be a shortage of fishing poles.” DOUG LARSON
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