It is well-known that the majority of traders are unprofitable. For the average trader, there is no trader’s block. Rather, there is an inversely symmetrical “block of inefficiency” that lets them
have temporary moments of profitability.
But there are traders whose craft is serious; they have shown worthiness in the journey, having strived and sacrificed their ego to achieve the inner virtues needed to be successful traders. It is
also natural that these traders may incur a period of block and inefficiency.
In such cases, there is nothing wrong with the trader. These periods happen regardless, for everyone. It doesn’t mean that something is wrong with us, how we trade, or our strategies.
They occur naturally and are actually necessary to maintain growth and balance.
But then, what to do? If you are an already successful trader, or an aspiring one, feeling in a limbo of unproductivity, this article can help you find your way out.
Three reasons why these periods take place
The following three things may represent the causes why a proficient trader finds himself stuck in a period of inefficiency. They will specifically provide insight on why one should stop trading in
these conditions. It is crucial to remember: that not stopping when you should will bear more negative consequences.
Note that proficiency is not only regarded as the ability to make money, but also the ability to gather knowledge and get better. The last actually comes first. This article is also directed to aspiring traders who are in the fundamental learning phase before profitability.
Seasonality
What we are trying to do while pursuing positive growth is exploit the laws of growth. To succeed in the game, we have to stick to those laws. Then, everyone tries to figure out the best paths and strives to become successful, in our case, in trading.
But sometimes, the markets are in a certain season in which we are not supposed to profit, or we, as individuals, are in such a season. In other words, the game is also to stop for a moment.
This world works in cycles, in seasons. Whenever we try to alter these cycles, we must expect that nature eventually rebalances things up: the more we keep altering and resisting rebalance, the more nature accumulates.
There are seasons when we are meant to stop. We want to succeed in this world, yet we partly neglect its laws. If we want to play the game, we must play according to its laws, and sometimes it’s time to stop and wait. If nature is everything, why should the markets, or us, be not included in it?
They respond exactly to the same laws as everything that belongs to nature. If we think that not being true, because humans manipulate the market: we omit that human artifacts are also subjected to these laws.
There are two common erroneous assumptions we tend to make: that humans can operate above natural laws, and that they can exempt themselves, while simultaneously exploiting them to grow positively; we would be wrong twice: these assumptions, along with the (exaggerated) hard work mindset, bring us to neglect seasonality.
Therefore, we end up neglecting rest.
You need rest
If one needs rest and yet he keeps working, he is just draining himself down, getting no better results.
Imagine playing football, having a stamina bar, and running carelessly, non-stop; two things are going to happen – a completely drained-out stamina bar, and zero efficiency in-game. Moreover, a possibility of collapse may add to it.
When a “collapse” happens, one’s recovery time increases exponentially; in the worst scenario, he will never recover.
It is not just risk that one should manage in trading, it’s also energy. Energy management is key to success.
The law of reversed effort
This law is another translation of the same concepts expressed earlier. We could say that these three things all come from the same idea, that they are different interpretations, and that we can apply each to their more pertinent conditions.
Jonny Thomson has addressed the topic comprehensively and intelligently in this article on bigthink.com, which is recommended to read.
The law of reversed effort concentrates on relaxation. According to this, we are at our best potential when we are relaxed. There is a fine relationship between relaxation, calmness, and equilibrium, indeed, they appear to be the same thing. It means being neutral. Relaxation is a state of absolute neutrality of the conscious mind. The closer we are to this absolute state, the better the works we produce through action.
When a trader is in a period of unproductivity and block, he is most likely pretty far from being relaxed. The cause may be stress, worry, anxiety, or more generally, an unbalanced state of being. The tendency is to work more, to try harder and harder; but this is detrimental, totally inefficient, besides, possible bearer of destructive outcomes. Working hard can be positive, but also negative. This is why we should always seek the optimal mean and never fall to an extreme.
The misconception about relaxation implies the absence of action. Instead, the perfect potential
of one’s actions is reached through absolute relaxation. It is then clear that when one can’t act
to his best potential, relaxation is missing.
Furthermore:
Since relaxation generates optimal action, a relaxed trader would by himself harmonize with the
seasons, and therefore also the appropriate rest periods. He would abstain from acting too hard or too little because that would break the equilibrium. The relaxed trader is a successful trader without any conscious effort: relaxation is the effortlessness of the conscious mind.
The solution
Combine the three things into one. Rest according to seasonality and individual management of energy. Aim to relaxed action, that is action in a constant, absolute state of rest.
When the cycle of the external environment is going through an unfavorable phase and suggests rest, then rest. In the same way, if you feel like needing rest, then rest. Most importantly, be focused on the present moment, let your consciousness rest in the now, and act effortlessly.
Very important: rest is not a gateway for ego indulgences, but the restoration of energy; do not
fall into the illusion that resting is a pass for temptations and bad attitude.
Stop trading, and get your rest.
Restoration is a universal solution. It can be found everywhere, possibly in different forms or translations, but with the same underlying essence. And if it is universal then it is also in us.
The answers, indeed, are all within us. Let’s take sleep as an example. Among the many purposes of sleep, our brain takes advantage of it to assimilate the new information received during the day. Likewise, we should do our conscious rest, take a breather from trading, to assimilate the results of work, study, and everything else.
Be aware that rest does not simply mean to stop sitting at the screen: not only our body has to rest, but our mind. Our conscious mind must leave the markets entirely. We have to dedicate ourselves completely to rest: no thinking about trading, no wondering about prices, no anxiety about it. We have to leave it there, take a healthy break for as much as we need, and then return fresh.
Good examples of rest would be to take a vacation, go into nature, do something fun, and relax.
Apply relativity to how much you should rest
The more we have gone without a period of rest, and the more we have pushed our energy limits, the more we need to rest. In cases of substantial drained-out feelings, a good rest could be two weeks. In some serious cases, even taking 1 month or more can be optimal, or even one full year. Regarding constant rest dedication in shorter time frames, a day off or two a week, 3/4 hours a day, 10 minutes per hour, would substantially help maintain a healthy balance and avoid disproportionate buildups. In general, every temporal environment seems to need its own restoration period.
These are approximate values, but in reality, we have to listen to our feelings to know what is the right thing to do. No one on the whole Earth knows better than us how much rest our mind needs, we just have to acquire the ability to listen.
Stop trading until fully restored.
Pushing too much is counterproductive.
It is not wise to think that wasting this much time resting is pointless. Indeed, it is unwise to believe that rest is a waste of time. Rest is a period of productivity, where the product is the restoration of energy.
Accumulating stress and pushing too much is the actual waste of time because it induces chaotical trading, plus it worsens and prolongs the rest period we have to incur eventually. Rest
is going to happen regardless. In the worst case, neglecting restoration will cause an irreparable collapse both for our capital and our minds.
Therefore, it is better to manage energy properly and enjoy rest. Let’s not force nature to do what it would do regardless of our consent.
In such context, a quote from “The Way Of The Superior Man” By David Deida, reveals to be of remarkable help to understand the proper approach to one’s own energy:
Lean just beyond your edge.
“In any given moment, a man’s growth is optimized if he leans just beyond his edge, his capacity, his fear. He should not be too lazy, happily stagnating in the zone of security and comfort. Nor should he push far beyond his edge, stressing himself unnecessarily, unable to metabolize his experience. He should lean just slightly beyond the edge of fear and discomfort.
Constantly. In everything he does.” (Deida, 2017)
The Aristotelian philosophers would say that this optimal leaning point would be mathematically represented by the golden ratio; in this context, the golden mean between working and resting.
In the Bible, God created the world in six days, and on the seventh, he rested. Regardless of one’s belief system, it is curious to see that even God has decided to take a break.
In conclusion
If we want to play the game, we have to stick to the laws of the game. Being a trader is not easy, and sometimes, regardless of how successful one is, there is a period of unproductivity that signals the necessity to rest. Not resting would only worsen the situation.
These periods are completely normal, not necessarily caused by something wrong with the trader himself, but by the cycles of things, and fighting them brings no result. One should instead accept and do the best thing accordingly.
One should also remember that working too hard is counterproductive; preferably, one should find the optimal point between working and resting.
Rest is a universal solution and may be the only thing you need to be proficient again.
Conscious rest is the solution for a trader drained by conscious effort. Absolute relaxation, constant state of rest, is the root of effortlessness.
Everything described in this article has the sole purpose of being informative and providing general information. The author has no intention of providing any financial advice, legal advice, or tax advice. Do not rely on this article to make investment decisions. Seek professional help before making any such decision. The author does not take any responsibility for loss or damage of any nature. The use you make of the information contained in this article is your sole responsibility.