To Trade, or Not to Trade…

…that is the question.  Whether ‘tis nobler in the mind to suffer the slings and arrows of outrageous fortune or to take arms against a sea of troubles…

Actually, Shakespeare could very well have been writing about trading while on vacation.  (FYI, there is no evidence to the contrary.)   It seems like no matter what you do, it ends up being complicated.  With the upcoming Trading Triangle in Maui, it’s a good time to start thinking about it.  So what DO you do with your trades when you have a vacation upcoming?  There are several alternatives:

1. Close your trades. This is the best, by far, what to do when you’re going on that “Trip of a Lifetime” and don’t want to waste a single moment of it worrying about the trade.  By completely shutting down your trading, you can spend the entire time enjoying the vacation.  After all, that’s what vacations are for, right?

2. Limit your size. This might be a good thing to do if you have some flexibility in your vacation schedule that allows some time for adjustments but when you don’t want to have a full-sized trade on in case you make a mistake.  Personally, I’ve found this doesn’t work for me because I consider a single M3 as time-consuming as 10 of them, but it might work for you, depending on what you’re trading.

3. Pick your time. I like to schedule vacations during expiration week because I can always make the decision NOT to trade then without major consequences.  (I wonder if airlines see these odd jumps in flight bookings during the third Friday week of every month and wonder why?)

4. Trade as usual. Perhaps it’s a short vacation where you’re not really planning to do much other than relax. If so, you can just schedule that last hour of the day to handle your M3 with no problem.

5. Trade a simplified version. If you normally trade a ROCK, trade a straight M3.  If you normally trade a variation of an M3, go back to a simple M3 by strict guidelines.

6. Set alerts. If you don’t normally use them, now is a good time to start.  Set automated alerts for adjustment points, greeks limits, underlying prices, whatever you need to make sure that you get notified if you need to adjust.  This way you won’t accidentally miss it when you’re sipping your adult beverage by the pool.

What is the right answer?  A lot of it depends on the type of vacation.  If you’re headed somewhere with spotty internet, you probably don’t want to trade full-sized.  (Keep in mind that other countries have a different definition of “good internet access”.  When I was living in Belize, a satellite link was “good.”  You haven’t really learned patience until you’ve dealt with TOS over satellite.)

If you’re just relaxing and helping Aunt Sally do some painting around the house, you can probably take thirty minutes out each day to monitor and adjust your trade, so perhaps you’ll just trade as usual.  If you’re on a tour that doesn’t have much flexibility, you may not want to trade at all, since leaving the other folks waiting in the lobby while you make that last adjustment isn’t a good way to make friends.

Like everything in trading, what’s most important is to have a PLAN.  Create a vacation plan waaaay before you leave.  I didn’t and had, sadly, the expected unfortunate results.  But that’s a story for another day…

Written and contributed by Cynthia Sarver