Shut off the water, adjust the thermostat, load up the car — and set your portfolio for holiday trading.
Life (hopefully) doesn't revolve around the market. If the holidays are calling, it's nice to have one less thing to think about before heading out.
But once you've got your calendar updated with this year's remaining market holidays, and your eye on the three market gauges that are important this holiday season, here's what to do with your trades before you go on vacation.
Reducing Exposure And Considering Losses During Holiday Trading
The first step to take is to reduce the number of holdings in your portfolio, says Harold Morris, senior product coach at MarketSmith. Before a recent holiday period, "I only had two longs, Nvidia and Consolidated Water," Morris said on Investor's Business Daily's "IBD Live" show.
By tidying up your holiday trading, there are fewer stocks to watch, less capital exposed — and fewer things that could potentially go wrong while you're away.
Another step is to consider your options trades, Morris says. Sometimes, these call for stop losses in place for certain securities. Morris points to Nvidia, when he bought into the graphics card maker as it gapped up in May. That gap-up is used as the base of his stops. Shares of Nvidia are continuing to rise past the breakout day of a double-bottom pattern that began in August.
Knowing Your Risk And Your Losses
But even holiday trading is no different from trading during any other day. The core is knowing where the risk is and how much you can afford to lose. Morris points to ServiceNow right before a recent holiday. He had a debit spread options strategy already in place and knew what the risk was.
"I go in with the mindset that if this trade just collapses, I already know what my risk is, and it's not a major hit to my portfolio," Morris said.
Follow Mike Juang on X, formerly Twitter, at @mikejuangnews.
