skip to main content
Trading Education Posted by Team Topstep July 2, 2020

Vacation Trading: The Do’s and Don'ts

It’s July 4th weekend in the United States, this often marks the peak of the vacation season. While Covid-19 has put a damper on many travel plans, now that restrictions are more relaxed in many parts of the world, vacation hot spots are sure to be gaining attention. In fact, after having been somewhat isolated for the last few months, who doesn’t need to get away and enjoy other attractions?

I have been trading for a significant portion of my income since 2008. Some of that time, trading was my only source of income. During these 12 years, and the five before going full-time, I have many experiences and observations to draw upon that help me maintain my success today. One of these is a vacation trading philosophy.

First, I will assert that we all have different personalities. Therefore, what one trader may find to be a necessity, another trader could see as optional. However, no matter who you are, every trader should set expectations and guidelines for vacation trading. I have had multiple vacations interrupted by adjusting positions, conference calls, and yes, on one occasion, even a margin call. 

Don’t Ruin It For Everyone Else!

Everyone needs a little relaxation, especially traders, even when you don’t think so. Below are some recommendations for when you go on vacation. If you are single, then there are likely fewer repercussions to breaking vacation rules. However, if you have children and a significant other who are enjoying the vacation with you, then it’s wise to consider their needs. 

It is not enjoyable to be on vacation with someone who has to constantly monitor a computer or phone, looking at price quotes or charts. What’s even worse is when you are managing losing positions, pretending you can enjoy time with family while working in a mobile office. 

Vacation Check List

1. Consider Going Flat

If you’re like me, then there is something repulsive about your account carrying no positions for days at a time. After all, when you’re flat, there is no earning potential. However, I have found this to be the most enjoyable way to vacation. Consider, the primary goal of a vacation is to do something different, that allows your mind and body to relax and be rejuvenated. How can you do this while carrying out a portion of your trading routine? 

2. Limit Positions

Okay, I hear you, there is no way that you are going flat. If that is you, then consider this second option. How about refusing to open new positions while on vacation? With existing positions, there is so much homework that goes into entering a trade, but your methodology should make it easier to determine your limit or stop prices for an exit. I know essentially this means the same as #1 to day traders, but still, if you are a swing trader, then this rule gives you are a fair compromise. 

3. Keep Your Winners On, Forget Your Losers

Again, this rule applies more to swing traders than day traders. However, let’s say you want to keep your positions open. In that case, it may be most prudent to only leave your winners on. Most likely, these are the trades that require less distraction and mental/emotional capital that take away from your vacation enjoyment.

4. Limit Yourself to Twice a Day

Okay, I assume somebody is on board with rules #2 and #3. In that case, since you still have positions on, then discipline yourself to look at your account balance and position quotes twice daily. Once in the morning, and then in the evening, about 12 hours later. If you want to score more points with your family and exhibit even greater discipline, then resolve yourself to only once a day. 

5. Automate Your Trading

Having some system in place that automatically enters and exits your trades via an algorithm is a good idea. However, you can help yourself out by doing even less. Pre-plan your stop-loss and limit orders, enter them in your platform as an OCO (one-cancels-other) and let the computer do the work. The goal is to spare your time and mental capital by avoiding the determination process of when to exit your positions while on vacation. 

It’s OK To Take a Break

Admittedly, these rules are geared more for the swing trader than the day trader. If you are a day trader then I suggest following #1. However, if you cannot overcome the itch for trading, then I would suggest that you at least resort to swing positions utilizing these rules. If you still can’t help yourself and insist on day trading during vacation, it may be helpful to talk to somebody about your addiction, just kidding (but not really). 

If you’re going on vacation then these rules might be a good bargaining and negotiation tool between you and your family for vacation trading. In the comments section feel free to ask questions, give pushback, or even post your own rules for vacation trading. I will be coming by to check on these and look forward to the interaction.