Do you think trading will shave years off your life?
Should you trade every day (so you don’t miss out on the “big move?”)
Or do you find trading stressful? Do you require frequent sabbaticals, away from the charts, in order to recharge and come back to the charts fresh, with a new perspective?
Darren and Walter jump into sabbaticals in this episode… and internet in Croatia and post-it notes.
Download (Duration: 25:16 / 28.9 MB)
In this episode:
00:45 – companies use sabbaticals
05:01 – have a break
06:42 – triple bypass surgery
08:57 – what actually makes you happy
10:21 – what drives you?
11:59 – guys trading in a pit
17:18 – sabbatical routines
19:20 – time for charts?
21:31 – real damage
23:03 – desperate moves
The more time I spend away from the screen, the better my trading decisions are. [Click To Tweet].
There’s no harm in missing a few trades. [Click To Tweet].
Trading sabbatical = a fresh perspective. [Click To Tweet].
Darren: I’m not taking the sabbaticals to get away from trading but I do get a lot of benefit from them.
Announcer: Two traders; Darren and Walter, pull back the curtain on profitable trading systems, consistent money management and profitable psychological triggers. Welcome to the 2 Traders Podcast.
Walter: Welcome to the 2 Traders Podcast. I’m Walter Peters, I’ve got Darren on the line. Darren, today we’re going to look at this idea of the sabbatical. This is going to be interesting, we were talking offline, I think you’ve got some really fascinating ideas about sabbaticals and I’d like to hear more about your experience with sabbaticals and how that’s changed your trading.
Darren: Yeah. The sabbatical is this idea that’s used by some companies now, where they give their key employees, they give them some time off work. The ratio is like 15% or 20% of their time to do whatever they want with and the idea being that, this break from restrictions of work, they can think more freely and come up with really good ideas basically. There’re some quite well known examples of this, one is Google that gives 20% of their time to do what they want to their software engineers, and another company called 3M, which is a stationery company. In the sabbaticals they’ve given to their engineers they invented the Post-it Note and the Scotch Tape. They’ve come up with really good ideas when they’ve been having this break from work.
Obviously, we’re talking about trading here, and I was thinking, “Well, how does this correlate in the trading world?” I go on quite a lot of long trips away and I find those really good for me, mentally I get recharged and not just from trading, from all the aspects of my life. Then I was thinking a bit deeper about it, and then I was thinking about how I trade in today and how so recently I’ve been slightly changing my mindset about that. I always held this belief that, if there’s opportunities to trade, and people are saying, “You know, I’m going to stop trading when I get to 100 pips,” or ideas like these of cutting off their trading, and I always had this belief that, if there’s an opportunity there and a set-up you should trade. You should take it but obviously if you’re tired then you should take a break, because we know trading tired is not good.
The problem is that I like trading and I get a buzz out of it, so invariably what happens is, I’ll have a good morning trading and then I’ll be a bit tired in the afternoon, and I’ll keep trading because there’s valid set-ups, but I’ll make decision and judgement mistakes, and give a lot of my profits back. It’s only when I started delving a bit deeper into this, I realized that one of my laws for continuing trading was that we don’t want to miss out on opportunities and I know that there’s often a good move in London, and then there’s often a good move in New York. I wanted to get all of those pips, but what was happening as a result, was I was trading tired and then making mistakes. Because my mindset was set one way, I wasn’t really seeing those pips I was giving back, those loses. I was glossing over them and just focusing on the other occasion when I got a win in the afternoon, and that became more important to me.
More recently, I’ve switched that mindset, and now, if I’ve had a really good morning I’ll often just not trade in the afternoon, whereas before I’d just keep trading, in effect, having a sabbatical during the day. That didn’t add up to me before because I think in the past I was too focused on the amount that I’d want in a day and that was all important, whereas now I’m sort of changing that mindset and thinking more, it’s about feeling fresh and being able to come back and repeat the process and not making mistakes. For me, that’s one way that I’ve used this idea of sabbatical and it works really well for me.
Walter: Is it fair to say that in the beginning or earlier the focus was on the days catch. How many pips did we catch or how much money did I catch this week? You kind of wanted to maximize this, whereas now it’s almost like your focus is on you and you’re more about maximizing your performance and giving yourself the optimal … I don’t know what you would say … Screen time or trading time and time away from the charts and that sort of thing?
Darren: Yeah, and more about that kind of negative affect that rolls over when you make bad decisions or mistakes. You say, maybe you make a mistake and you only lose 20 pips so it doesn’t matter but that has a bit of a roll on effect as well. It takes time then to erase that bad feeling from … “How could I be so stupid I knew I was going to do that.” Or “I should have taken a break.” It’s more about removing those from your trading than … It might actually not be winning any more pips but I find it easier to trade well.
Walter: Yeah. That makes perfect sense. Have you noticed a difference in your performance since adopting this or has it been too soon? Do you only have a few days or how does …?
Darren: The real thing is I’m more relaxed and I enjoy the trading more, and I can have a break more and I just don’t find it as stressful.
Walter: Yeah. I think a lot of people don’t look at it that way, they look at it more in terms of the money made or the pips gained or what the win rate is, or average win, or whatever their bottom line is. It gets back to that last podcast we did about numbers and quantitative numbers. This is interesting because I’m thinking back to the guy who introduced me to Forex. This was a gentleman who ran this free courses, and they’ve since been shut down but apparently what they were doing … I see now what was happening is they would teach people how to trade Forex and they would shuffle them along as an introducing broker, so they would add to the spread. That’s how we had a 14 pip spread on the euro; was because they were taking their cut out of there. This was way back when online trading was just starting to come in, like Saxo Bank and FXCM had just opened up shop online.
The reason why I’m thinking of this guy was because he had a triple bypass surgery and he said … I’m not kidding it is totally true. He said, “Look, if I can trade the day after my triple bypass surgery, then you guys can trade too.” He was making this point that, “Look, you should be doing this everyday and it’s something you can always do and you don’t …” It was almost like he was tying to instill work ethic in us and that we had … Mind you we had to go into this office to get the live charts, because all of the Forex feeds were delayed. It just says, “Stock feeds were delayed 15 minutes.” We had these delayed Forex feeds and so it was just a nightmare, and until FXCM came on, then we had live charts but it was just crazy because you could just see this guy was so … He was not interested in his body and how he felt, in maximizing his trading machine as it were, his body instead, he was thinking about making sure that he was always there for the next big move.
Darren: Yeah. I think we wrongly get sucked in, maybe I’m just talking personally now, but I think we get sucked in this where, “I’ve just got to make a million and then when I get a million I can get that house and I can get that car I wanted. Then I can get another 2 million and then have a five, and then maybe if I’ve got 10 million then I can have some time off.” I think I used to think like that as well and then I stopped and said, “Hang on a minute. What actually makes me happy?” Then I think about what I do when I don’t have to work in my own.
I worked out how much I spend on a day to do that, and it was like, “Really all I need is 600 pound a week is more than enough for me to do what I want to do be happy, so why do I need a million or 5 million or 10 million? How long am I going to have to make myself unhappy to get there? Truly, like really, I want to be enjoying the journey as well as the goal to aim for.” I think a lot of get sucked into that and certainly a lot of people will only be happy when they get there, but for me it’s slightly different I think.
Walter: Yeah sure. I think that’s because you’re probably more in tune with what drives you. A lot of people just assume it’s going to be money, or assume it’s going to be as soon as I can quit my job or so forth. They don’t really think in terms of the big picture which I think is … I think the way that you go about it is great. If everyone sat down and said, “Let’s see, what would I do right now if I just … If I could do whatever I wanted to do right now, what would it be? Would I be out sailing? Would I be travelling? Would I be taking photos of birds in South America? What would I be doing right now and what makes me happy?” instead of allowing for your culture to set your goals for you, instead you just think about what really drives you as a person. What are those things that you just love to do and focusing on that.
Darren: Yeah definitely. I think then, if you start thinking that way is where you probably going to end up making better trading decisions because if you’re literally just focusing on that million pound, on that Ferrari then you’re probably not in the best mindset to be trading. I think we’ve got that whole image, haven’t we? We’ve got that picture of the Wall Street trader with…… a nice big house, a beach house and all of that, and we paint that picture, don’t we? I don’t think really that’s the best mindset for people to trade with. It’s certainly not for me. I could be wrong.
Walter: Yeah absolutely. The thing that always got me about the guys trading in the pit, and I know that these pits are disappearing now with most markets going electronic, and certainly obviously, forex doesn’t have a pit anywhere. The thing that always got me was … I had a friend actually from high school I ran into, and he was trading in the pit in San Francisco, at the Pacific Stock Exchange but anyway, the thing that I always think of is this vision of these guys who things are so hectic that day that they can’t leave the pits, so they can’t go to the toilet and so they’re just standing there and they’re pissing their pants because, you know what I mean? That’s the story that I’ve heard and I just can’t get that out of my head. I’m thinking, “What kind of job is it if you literally have to piss your pants because you can’t move from where your job is?” To me that’s definitely not happiness.
Darren: I wonder whether you know, I always question these ideas in trading where certain things work because of such and such and these kind of stories that; because I’m always suspicious of those, about how true they are. I wonder whether, because we talk about the advantage of trading the higher time frames, and I wonder how much of it is the fact that you were in a fact taking sabbaticals from the screen and that having that extended time between having to make your decisions.
Walter: Absolutely. That is the core of my belief. Yeah, I’m with you on that one. I believe that the more time I spend away from my screen, the better my trading decisions are, and my goal is to do exactly that; it’s to look at the market basically in the morning when Asia opens, and then try and stay away from the screen as much as possible, until we’re looking at the London open. I believe that if I do that, I have a pretty good … My belief is, that I have a pretty good handle on where the market is likely to go that day, for the rest of the day; meaning London and New York because that’s the pattern that I’ve been used to.
What I learned … I was one of the first traders to have his trading platform on his phone, and what I learned from that was … You know, I’d be out to dinner with my wife and here in Asia we have the London markets in the evening. I go out to dinner with my wife and we’d be sitting there, and I would just be on my phone the whole time. I’m like, “What I’m I doing?” Trying to move the stop or whatever, and what I found out was that the decisions I made, by having the screen literally in my pocket at all times, those decisions were not money making decisions. Those were very poor decisions. I was cutting my winners too quickly and all these sort of mistakes that I made earlier in my career, I made again because I didn’t get away from the charts.
Now what I do is, I spend the middle of the day doing anything but looking at my charts so that I’m really fresh when I come in and take a look at where the Asian market is … Sorry, when the Asian market closes and when London and Germany and Europe is starting to fire up. It’s like I haven’t seen the charts, I’ve just seen the open and then I see that first beginning part of London, then I can decide, “Okay, this is what I’m going to do.” Obviously, people who are members of our trading group, they see those videos then and they see your videos, so they see how we approach it but for people that don’t know that it’s … To me it’s so critical to have that fresh point of view, and the way I found this out was basically from taking a sabbatical.
What I found was that I was in Croatia, and I was actually trading. It was years ago and it was a difficult thing because you had to find an internet café and it was hard to get internet and this sort of thing. What happened was, I wasn’t really following the charts that much but I was making really good money, and I was like, “This is great. I’m on holiday and I’m making money because I’m not over managing my trades.” That was the catalyst for me to make sure that I spent more time away from the screen.
I think that what you’re talking about is absolutely true, that part of the advantage that you get when you trade in the higher time frames is that you get these little screen sabbaticals. The other part of it is that you’re doing more planning and you’re trading, whereas when you’re trading the one minute or the three minute or the five minute charts, you’re actually doing more reacting. It’s a little bit of a different … There’s some planning there but it’s mostly sort of reaction, it’s a different kind of a … That’s just what happens in your brain, what’s activated in your brain, but … Yeah, so I think that’s definitely part of it.
Do you have a routine in terms of you take a sabbatical X number of months or if something happens in your trading, or how do you approach that?
Darren: You mean my longer breaks away?
Walter: Yeah, because every … Yeah. Listeners may not know but it seems to me that every couple of months Darren you’re off riding your motorcycle through Asia or hanging out down in the warm parts of Europe. It seems like you get a lot of these, so I’m just wondering if it’s just sort of like, “I feel like it,” or if it’s, “I want to take a break from my trading now because X happened or Y happened or …” What’s your approach?
Darren: I don’t actually want to take a break from trading because I do really love it and I love the whole sort of involvement and it gives me … It’s a purpose, it’s a job and I like that. I don’t like to be idle for long times but I do find that as soon as I’m there, I quite often go with a plan, “Okay. Well, I’ll trade some 4 hour stuff because that will give me a bit of a break.” Then I’ll say, “Well, actually I’ll trade some daily entries ,” and then before you know, I’m just not looking at the screen at all. I’m not taking the sabbaticals to get away from trading but I do get a lot of benefit from them so that’s why I keep doing it. Mainly I’m doing it because I enjoy it, it’s fun for me but there is positive … I do come back refreshed and I see things in a bit of a clearer light.
Walter: When you’re off on touring around and having fun, is it that you have fewer minutes on the charts than you would, say if you were at home? Is that part of it?
Darren: Possibly. It’s a difficult one for me. When I’m here and I’m trading, that tends to keep me quite disciplined so I start to think about what I’m eating and whether I’m exercising and I have a bit of an exercise routine. I don’t really drink much, I have a nice sleeping pattern and this sort of trading is the thing that give me discipline in my life. When I go on holiday, I cut lose and I party and I stay out too late, drink too much. In effect, they’re working opposite each other and if I was just always on holiday, I’d end up in an early grave and if I was always trading, then I’d probably find it a bit boring. It’s kind of that … It’s being in control and again I need that to release that opposite side of my personality.
Walter: Right, so the balance comes from the different routine; the routine on holiday and the routine at home. Yeah, interesting. I think that for me having a sabbatical is really good when things aren’t … When we’re going through a drawdown, when things aren’t going so well, that’s really good for me and more importantly, going through and doing my back testing then to reaffirm that I know how to execute the system and that sort of thing. I also think though that there’s a real trap for those traders who have jobs and if you’re a trader with a job you probably are spending at least 8 to 10 hours away from home, at a minimum. That means that now you’re talking about, if you’re doing any sort of trading, especially in the lower time frames, that means you’re probably going to cut into your sleep time; whether it’s in the morning or in the evening or whenever, outside of your work hours.
That I think is where the real damage is done because losing out on that sleep, that’s going to affect you all around and that’s going to really hurt. We’ve all been there I suppose, where you’ve been sleep deprived and you haven’t been making the right decisions. I see it in my emails; if I’m sleep deprived my emails won’t make sense or things will be slightly off. I think that as a trader who has a job, it’s probably going to be easier for you to spend time away from your charts if you’re looking at higher time frames because if you’re looking at the lower time frames and you’re holding down a full-time job, it probably means that you’re going to hurt yourself by not having that sleep time. In other words, you get more sabbatical from your trading as a trader with a full-time job if you’re able to make your trading decisions rather quickly; in other words trading the higher time frames charts because you can basically sit down in a half hour, figure out everything that you’re going to do with all of your trades or all of your charts.
That should enable you to have a somewhat reasonable life and especially when you’re on sabbatical from your work. The temptation for large traders is to jump right into trading, isn’t it? I used to think that way where I was like, “Okay. All right. I’ve got a month off now, so what I’m going to do is just trade like crazy.” That’s another big mistake I think. You’ve probably been through that.
Darren: Yeah, definitely. I think a lot of us, we’re desperate to make some changes in our life and we want to get on with it, “This is our opportunity,” and then I think the temptation is to try and force it like you say, and cram too much in and force opportunities when they’re not quite right, “I know it’s going to set up but I’ve got to go to work so I’ll take the trade anyway,” and then you’re in realms of making bad decisions as well.
Walter: Exactly. That’s exactly it. All right Darren. Is there anything else to add? I think that we’ve touched on sabbatical. I think it’s a great way to recharge your batteries and not only think of it in terms of yearly or an annual sabbatical or weekly, but a daily one away from the charts and how you can basically use this idea in your trading to refresh yourself, probably make better decisions, enable yourself more profits over the long haul, simply because you’re keeping yourself fresh, you’re keeping your analysis really tight and clean and it’s based on what you see and not what you think. I think this is a great way for people to incorporate this simple idea to basically improve their trading because they’re not sleep deprived, they’re not scattered, they’re not unfocused; they’re simply getting that time away from the charts so that they can make a really clear decision based on what they can see when they do see the charts.
Darren: Yeah, I agree totally Walter. Especially, from my point of view, if you’re trading in today, there’s no harm in missing out on a few moves if you’ve already made pips and there’s no harm in taking a break for the rest of the day.
Walter: Great. All right Darren. We’ll see you next time. I think next time we’re going to be talking about placebo, is that right?
Darren: Yeah, definitely. I want to do one on placebo. It’s an interesting subject.
Walter: Great. All right, we’ll see you next time Darren. Take care.
Darren: Take care as well.