Today marks the start of the holiday season. During this time of year, many people have extra responsibilities and hassles. There are holiday parties to attend, family obligations, and holiday shopping. With all of it comes added stress. There are two ways you can handle it, though. First, you can let it all get to you, and that, in turn, will influence your trading decisions. Or second, you can use the time to take it easy and get a well-deserved rest.
As you are well aware, the holiday season can impact the markets in a variety of ways. The market closes on holidays throughout December and that can impact how traders react. Consumer confidence influences holiday spending, which in turn impacts prices in some sectors. And it’s the end of the year, a time when some investors may decide to close out positions for tax purposes. In some ways, it is not business as usual. These changes, along with the added stresses in your personal life, can make this time of year especially chaotic. You might want to consider standing aside more often than you usually do and getting a little rest in preparation for the next year.
The mind is similar to a muscle. When you go on a long run, for example, you soon run out of energy. You can’t go any farther. Your muscles begin to ache and you need to take a rest and recuperate before you start moving again. After a year of fast-paced trading, it may be useful to take a rest. The mind has limited energy. When you take a rest and rejuvenate, you can face the market action with a renewed sense of vigour.
Trading often comes down to performing in a peak performance mindset at a few key moments. To take advantage of these key moments, you must be relaxed. If you have strained your mental “muscles,” you’ll have difficulty taking advantage of these opportunities. Your mind will be elsewhere or you’ll be too tired to act decisively. When you’re tired, it’s hard to gauge market action accurately.
You’ll be prone to decision-making biases and you may act impulsively because you are too tired to patiently wait for the proper signals to enter or exit a trade. By staying relaxed yet full of energy, you’ll be able to trade in a logical and consistent manner. You can use the holiday season to take a break and get some needed relaxation and rejuvenation.
How you react to the holiday season is your decision. You can let the added stress get to you and feel overwhelmed. Or you can cut back your obligations, whether trading commitments or personal commitments and rest and relax. If you use this time to rest, though, you will be ready to tackle the markets energetically and enthusiastically at the start of the New Year.