Trader Fatigue Management

By | February 27, 2024 4:55 pm

BY Lance Beggs

Fatigue management is a favorite topic of mine, due to my interest in aviation and in particular aviation safety. In military aviation, in both a training and operational environment, fatigue management is recognized as an essential function of command, in order to minimize risk and enhance operational effectiveness.

The same applies to the management of your trading business. As a trader, fatigue will reduce the quality of your work – your preparation, your market analysis, your trade execution, your trade management decisions, your focus, your patience, your ability to psychologically accept a loss and your ability to stick to the process of trading.

Here’s a great quote on the dangers of fatigue, sticking to my military theme.

“Some of the COs were awfully heartless and brutal. A few had no idea about how to command men or judge a soldier’s capabilities. Too often they would order young boys to lug a dead weight for miles, and when the young fellows reached the front they would be too exhausted to fight. I have seen them in tears, too tired to struggle on. They furnished an easy target for enemy gunners. More than one frail, green kid got cut down due to such incompetence in officer’s ranks.

…PTE Vincent E Goodwin, WWI Diary

Ok, you’re not at war and your life is probably not at risk from the markets, but the results can still be devastating.

As a retail trader, you’re CEO of your own trading business, as well as the trader. As CEO, are you pushing your trader too far, trying to achieve too much too soon, without sufficient time for rest and recuperation? If so, if not managed properly, the results can be financially devastating.

Life is tough. There are many demands on an adult. For many of us, on top of a full-time job and a full-time family, we decide that we’re just not happy and need to work at developing another income stream to replace that job we despise. For varying reasons, often the allure of easy money, we’re attracted to the financial markets, and before we know it we’re burning the candle at both ends – effectively working at a third full-time commitment.

Being so busy, sleep is the first thing that gets sacrificed.

But how does that affect us, and our trading results?

Let’s look firstly at a quote from a publication, ‘Beyond the Midnight Oil: An Inquiry into Managing Fatigue in Transport’ published in the year 2000:

“17 hours of sustained wakefulness leads to a decrease in performance equivalent to a blood alcohol content (BAC) of 0.05 per cent. The decrease in performance after staying awake for 24 hours is equivalent to a BAC of 0.1 per cent. A person with a BAC of 0.05 per cent is twice as likely to have an accident as a person with zero BAC, while a person with a BAC of 0.1 per cent is seven times more likely to have an accident.”

For those in countries where Blood Alcohol Content is measured differently, in Australia a BAC of 0.05 is the legal limit for driving. So 17 hours of sustained wakefulness leads to a reduction in performance, equivalent to being drunk.

You wouldn’t trade drunk, would you, so why would you trade fatigued?

Maybe you wouldn’t start trading after being awake for 17 hours – the above example was quite extreme. And maybe in small doses the occasional late night may not be too much of a problem for you. After all, you can catch up on one or two late nights quite easily.

However, if lack of sleep moves beyond the occasional late night and becomes a habit, you WILL experience problems. Cumulative fatigue WILL directly impact your health, your mental well being and your trading performance. And the results won’t be good.

The result of trader fatigue is a reduction in ability to focus or concentrate on the task at hand, and a reduction in the quality of your decisions. Both of which lead to inconsistent and undisciplined application of your trading plan processes, the end result being a drawdown in equity. Not good!

How much sleep should we get?

Typical advice is eight hours of uninterrupted sleep per night, however the actual requirements vary per person and may be anywhere from 7 to 9 hours per night for an average adult, with children and teenagers needing even more. Even then, lifestyle can demand further sleep. If you’re involved in a physically demanding job or sporting activity, increased sleep may be essential to overcome the rigors of your daily routine and allow your body time to rest, repair and recharge.

The best way to work out your natural sleep requirements, and at the same time identify factors that may be affecting your sleep, is to use a Sleep Diary. For the next month, record the following information each morning:

  • The time periods in which you slept in the last 24 hours (eg. 10pm to 6:30am)
  • The quantity of sleep (eg. 8.5 hours)
  • The quality of sleep – give it a score on a 1 to 10 scale
  • Observed symptoms of fatigue or tiredness before bed (eg. irritable and stressed)
  • Positive factors affecting your sleep (eg. extra layer of drapes added to keep out first light)
  • Negative factors affecting your sleep (eg. had a coffee at 9pm, neighbor’s dog barking at 6am)
  • How you feel on waking? (eg. didn’t want to get out of bed yet)


Ok, it’s not too scientific. But it will allow you to identify your optimal sleep duration, and discover factors that are affecting your quality and quantity of sleep.

Fatigue Management for Traders

A general rule I’ve used in the military which applies well for trading, is that you can consider yourself suffering from acute fatigue if you have experienced:

  • Less than 5 hours sleep in the last 24 hours,
  • Less than 12 hours sleep in the last 48 hours, and/or
  • Currently been awake for longer than the amount of sleep you’ve had in the last 48 hours.


If this applies to you, DO NOT TRADE.

This is not permission to live on such a small amount of sleep. This is just the absolute minimum, which forms your GO / NO GO criteria for trading.

In addition to this, you need to monitor yourself. The effects of cumulative fatigue especially, can sneak up on you without you being aware. Be on alert for the following symptoms:

  • Any physical symptoms such as generally feeling tired, having heavy eyelids or yawning.
  • Blank stares at the computer screen (where did those last two candles come from?)
  • Mood changes such as irritability or apathy. Seriously, you DO NOT want to talk to me when I’m fatigued!!
  • Difficulty in focus or concentration, showing up as a failure to follow your defined trading plan processes. This will often manifest as failure to carry out basic tasks, such as incorrectly positioning your stops, incorrectly setting your position size, or incorrect execution (there’s nothing worse than going long when you meant to go short.)
  • Difficulty in communication, both in deciding what needs to be said, and in how to say it. This applies not only to direct conversation with another person in your trading environment, but also to online chat, or any other means of communication.
  • Difficulty in recording trade and personal performance parameters in your trading log or journal.
  • A general lack of motivation.
  • And of course, slow and confused market analysis.


These symptoms will of course also show up in tasks and activities conducted outside of trading. Along with another big one – difficulty getting to sleep and/or a restless sleep, as you just can’t slow down your mind from its desperate attempt to solve all your problems.

Most important of all though, you need to understand that these symptoms are often difficult to pick up in yourself, and may be apparent to others well before you’re willing to admit them. Certainly, my wife seems to ‘sense’ my irritability and lack of patience, well before I do. And as annoying as it is to be told that you’re not very nice to be around at the moment, it’s a great indicator of potential fatigue.

If you need to operate with reduced sleep for a period of time, consider not trading, or at the very least seek the assistance of your partner or another person to provide an independent assessment of your behavior, and potential levels of fatigue.

If you find yourself with a sleep deficit, the only way to correct this is to get sleep. The strategic use of caffeine may help for a very short period of time, as does a relaxation or meditation session, but they’re not viable long term solutions. The ONLY way to correct a sleep deficit is to get sleep. You need to cut down on non-sleep activities somewhere, perhaps even taking a day off trading.

The following factors though will assist in improving your quality of sleep. Consider implementing them into your normal sleep routine:

  • Minimize daily stress and anxiety through relaxation exercises.
  • Don’t rigidly stick to your fixed bedtime. If you feel tired before that time, go to bed.
  • If possible, allow yourself to wake naturally when your body is ready, rather than through the use of alarms. If this is not possible during the week, it should be over the weekend when you don’t have to work.
  • Have a pre-bedtime routine for 15 or so minutes, in which you relax and allow yourself to wind down. Consider having a notepad in which you write down any thoughts or concerns – they’re on paper now, so they’ll be there when you get up. You don’t need to worry about them till then.
  • Declare your intent for a good night’s sleep when you first close your eyes.
  • Ensure a quiet, dark, comfortable environment. Seek assistance from others in your house, or your neighbors, in minimizing noise that may affect your sleep. Consider the use of ear plugs if necessary, or an airconditioner to drown out external noise. Consider the use of an eye mask, or extra layers of curtains to keep out light. Set a cool but comfortable temperature.
  • Ensure no caffeine is taken within the 3-4 hours prior to bed.
  • Avoid cigarettes (or nicotine patches) or alcohol prior to bed.
  • Ensure regular exercise is not conducted just prior to bed.
  • Turn down your phone and answering machine.
  • Turn your clock away from you so you cannot look at it during the night.
  • And if you can’t sleep after 15 – 20 minutes, consider getting up and conducting a relaxing activity until you feel ready for sleep again. Don’t just lay there worrying.
  • Have a regular ‘waking’ routine starting with a stretch and a positive affirmation. Get the day off to a great start.


Of course, if sleep difficulties persist, and chronic fatigue begins impacting on your behavior and performance, seek advice from a general practitioner or psychologist.

And please, be sure to make sleeping pills or other medications an absolute last resort, and only under direction from a health care professional.

Sleep is essential for peak performance trading, so give it the priority it deserves in your trading business.

Happy sleeping!


Category: Trading Education

About Bramesh

Bramesh Bhandari has been actively trading the Indian Stock Markets since over 15+ Years. His primary strategies are his interpretations and applications of Gann And Astro Methodologies developed over the past decade.

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