Sleep and Trading
Where's the sweet spot?
Trading on Poor Sleep
Should you trade if you’ve had poor sleep?
The ‘Yes’ side will say “Oh but you’re going to miss something, just because you’re tired, doesn’t mean you won’t make money today!”
The ‘No’ side will say “I’m not well rested, I’m taking risk-based decisions, and there’s no way I can perform at my best with poor sleep”
What do you think?
I’m firmly in the ‘No’ camp… Why? Well, I’m a person who needs his sleep! It would be nice if I could still perform on 4 hours of sleep but I just can’t.
But I think the ‘yes’ side has some merit too. You can’t just not trade anytime you’re not feeling 100%. You need to find the sweet spot.
At what point does the risk/reward of trading on poor sleep become not worth it? 7 hours? 6? 3?!
Today, think about how sleep affects your P&L.
You might have a gut instinct but consider tracking your sleep and logging it in your journal. Then once you have some data you can look back and see how it impacts your trading performance.
The data might be clear:
“If I sleep for less than 6 hours my performance drops like a stone, I have a negative expectancy, so I won’t even consider trading on less than 6 hours of sleep”
Then it’s an easy fix and you can set a hard and fast rule.
You try your best to get more than 6 hours of quality sleep.
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Personally, exercising during the day is a huge help for decent sleep. But this article by Andrew Huberman outlines other ways you can improve your sleep and get those refreshing zzzzzz’s in.