dani face dani quote

How to Trade in Vacation Mode

Hey traders!

As June comes to a close and we approach another 3-day weekend and much-loved American holiday, the 4th of July, it’s a great time to take a bit of a step back from the charts. If you’re anything like me, when the markets are open, it is near impossible to look away. It’s almost like when you’re watching a terrible movie and you’d be in your right mind to turn it off and gain back some valuable time but you still want to know how it ends.

When the stock market is open, it’s just so hard to look away! The only way you can really do it is by setting some healthy boundaries within your own mind, and making sure your positions are either closed or on a bit of auto drive. Of course, ‘auto drive,’ isn’t as ‘automatic’ as it sounds. At least, not in the way that most people would think. For me, it’s a bit it’s more of a ‘less hands on’ approach.

Traders always ask me how I manage trades when I’m not in front of the computer. Here are my best tips!

‘Vacation’ Trading Tips:

Plan out your trades before you go with the intent that you won’t be as present as normal

This really goes back to your style of trading, and how present you are on a regular basis. For example, with my trading style, I normally trade options with the intention of holding my trade between 1-30 days. Sometimes, when the market is more volatile (like right now) I will place more trades that are expiring within 15 days or less. Oftentimes, I will simply trade overnight earnings reports, in which I will enter the trade for example on a Wednesday at market close and get out on Thursday at market open.

Oftentimes, traders try to maintain their same trading style when in ‘vacation’ mode, which I find to be a bit of a mistake. If you are accustomed to trading so many short-term, overnight trades, and then put a bunch of those kinds of trades on, directly before leaving – you know as well as I do that you are going to need to watch the charts all day to manage those short-term trades.

That is just setting yourself up to work throughout your vacation, which means that you in fact don’t get much of a vacation at all, amiright?!

This is why I try to take into consideration a few factors. Number one, if I can go flat, I always prefer this option. If you’re like me, you hate going flat because you’re out of the action. It’s hard to set yourself up to get flat because that means you have to pass on opportunities sometimes 2 weeks or more in advance! But, it’s best to remind yourself that going flat is a gift you give yourself. It’s only when you’re truly flat that you can disconnect and reset.

Now, if you had a couple trades on and they are working out, and you can’t imagine just closing them for the sheer fact of being flat (again, like me!) you can still make sure you went into those intentionally with some vacation tips in mind.

This means setting up your trades so that:

  • They are erring on the long side of as it relates to timeframes. For me, that means giving my trades 15+ days of life. That means it’s not as mission critical to watch the charts all day.
  • Your options strategies (specifically spreads or butterflies) are setup wide enough so that you aren’t trying to target a very tight range. If you’re trying to target a $5 range versus a $15 range, the necessity of watching the charts all day lessens.
  • Try to focus more on premium selling versus buying premium. When selling premium, such as with put or call credit spreads, they work overtime through theta decay. It doesn’t matter as much if the market chops around, or makes big moves, because your risk is defined and ideally your theta will just decay while you’re a bit more detached. It’s significantly harder to detach when you have spent high premiums on debits like long calls or puts, because they are much more volatile and they require more finesse in your exits.

Utilize technology to your advantage

Traders always want to know if I set good till cancel orders to get out of my trades. I hear often that traders who are working full-time want a method in which they can close their trades without them being there.

Let me first state that yes, you can definitely use GTC orders if you’d like, but it’s not something I do. This is primarily because I generally trade a lot of multi-leg spreads and I do not like the lack of control that comes with being unable to work my own exit order. I suppose this can be bypassed if you set your order at a specific dollar amount. But, then it goes back to, what amount would that be? Are you targeting 25%? Are you targeting 50%? The reason why I don’t like doing this is because I always like to analyze the chart before I exit a trade. This is because, for example, a trade may hit a 25% profit target but the pattern is still moving entirely in my direction. Why would I close it out for 25% if I’m continuing to watch the ticker fall?

I wouldn’t… That is why I like to use alerts + mobile technology instead.

Most brokerage platforms give traders the ability to set price alerts within their platform, and then connect those alerts to your cell phone. That means for example, if I’m trading Tesla and I have a price target of $650 yet I have a stop at $700, I can setup price alerts at both levels, and connect those alerts to my cell phone. That way, if I’m spending time with family, I can be sure that I’m notified if TSLA hits either my target or stop zone. At that juncture, I can then simply login (either via laptop or cell phone) to first check out my charts and then make a determination on what I’d like to do.

The reason why I like to do this is because sometimes your stop may get hit, but just barely, before price fades away from it. Why close it in that instance, just because you picked a specific price target in which you need to control your risk?

I use my phone a very generous amount. Not only can I use it for alerts from my brokerage platform, but I also maintain a presence in the market following along with alerts from my fellow teammates at Simpler Trading. Using our Simpler Trading app, members can utilize the push notifications the stay updated on price action throughout the day, even if they aren’t at their screens.

I also like to use media alerts as well. I use the CNBC app religiously and I’ve setup my push notifications to alert me to major market news updates, big moving stocks, index price action and more throughout the day. If I’ve stepped away from my screens, between these three resources alone, there is no way I can miss it if the market starts tanking or rallying hard. The push notifications alone will let me know that it’s time to get back to a computer!

Remember why you’re taking a break – and how much better it should make you upon your return. 

The last pointer just relates to your own self-control. You can pre-plan and use technology to your hearts desire but at the end of the day, if you don’t want to take a break, all of your efforts will be for naught! That’s okay sometimes, but what’s even better is giving yourself permission to give your brain a bit of a break. It works better when it gets some relaxation time, I promise. Coming back after a bit of a mental break, especially in this market, does wonders for your clarity!

It’s always harder to look at charts when you’re heavily positioned, because it’s human nature that we want our analysis to be right and we want trades to go in our direction. But, when you don’t have any skin in the game, it’s so much easier to see new setups clearly!

With the volatility in the market this year, it’s more important than ever to take some time out for yourself and especially your family.

And besides, can you imagine trying to tell this happy face you were going to work all vacation long?!

Regardless of where you are and what you’re doing this (in the US) holiday weekend, I’m wishing you some relaxation, whatever that means to you. As for me, I’ll be around, but, in ‘vacation mode!’

Up Next...

Growth Stocks On The Move, How To Capitalize

Hey traders!  This week, I wanted to highlight analysis from my friend and well-respected colleague, Mary Ellen McGonagle! She primarily focuses on stocks with a 2-week to 9-month horizon depending on market conditions. She has some great tips on how to capitalize on the current uptrend taking place! Check out her guest newsletter below to … Read more

Read More

How to Day Trade the SPX Using Butterflies

For today’s Five Star episode, I wanted to highlight what my colleague and fantastic trader, Allison Ostrander has been up to. She has been crushing it in our Simpler Options trading room, and her own Mastery service, using day trading butterflies on the SPX. I’ve loved watching what she’s doing, especially because, as you know, … Read more

Read More

AMD: Earnings in Focus

FAANG Earnings is Through: Is the FAANGover Next? We made it through FAANG Earnings Week, and saw volatile, market moving reports from the likes of Amazon (AMZN), Apple (AAPL), and Microsoft (MSFT). However, these moves, while significant, need to demonstrate follow-through for more continuation to the upside. Whether or not we will actually get that, … Read more

Read More

Subscribe Today!

Want to walk the path to trading success together? Join Danielle’s “Five Star Trader” E-Letter for market insights, tips, tricks, and special bonuses.

Sign Up Now
all-as-seen-on-logos