How well do you trade when you've had a bad night of sleep?
The results are probably something that leave a lot to be desired.
The thing is, improving your sleep isn't always as simple as getting eight hours or sleeping in a dark, cold room. Those things help, but what I've learned over the past few years is about a concept called energy potential, and it ties directly into your sleep and your body's clock.
We literally have a clock in the hypothalamus of our brain that is controlled by light. Of course that's going to be affected by where you live in comparison to the equator, whether you're in an urban or rural setting, and a lot of other factors.
The cool thing is that no matter what your surroundings are, no matter who you live with or don't live with, you can improve your trading by taking better advantage of your energy potential.
I learned a lot of this through a sleep app that I absolutely love called RISE. I want to give you a breakdown that may inspire you to revisit your sleep this summer and pay a little more attention to how your energy changes throughout the day.
Grogginess
Most of us wake up a little fuzzy, even after a good night's sleep. That's normal. This is your grogginess period. It's your body transitioning from sleep into being awake, and for many people it can last close to an hour.
So for those of you who think, “Well, if I want to trade at 9:15 AM ahead of New York market open, I'll just roll out of bed at 9:00,” that's probably not going to be optimal because you'll still be in that grogginess state.
Whether you're day trading or taking your morning to put on swing trades, consider trying to wake up at least an hour before you actually want to be in trading mode.
Morning Peak
Morning peak is where you're most alert and focused. Even if you consider yourself somebody who's not a morning person, there's still a biological period after you wake up where your energy steadily rises, stays elevated for a while, and then gradually starts to come back down again.
One thing that's important to understand is that these phases aren't stair steps. They don't suddenly switch on and off. They're more like gradual rises and falls.
The morning peak is great to utilize for scalping or day trading. It's also great for doing identifying trades for swing or position trading. It’s also prime for doing any other deep work. If you have a day job, you've probably noticed that you get a lot more high-level brain work done in the morning.
This is your morning peak.
The Afternoon Dip
I think we've all heard about this, right? The post-lunch crash.
For many people it happens sometime after noon, but it's really about your body moving through its natural circadian rhythm. Your energy and mental alertness tend to be a little lower during this period.
That doesn't mean you can't trade. It doesn't mean you can't continue to work.
It simply means you should be aware that you're probably not operating at your optimum during that window.
The Evening Peak
There is an evening peak for many of us.
It's that period after the afternoon dip settles out where you get what we often call a second wind. It happens to me all the time.
That's a great time to study your own trading, review journal entries, work through course material, practice techniques, or do other focused mental work.
A lot of traders spend time looking for the perfect time to learn. Sometimes your second wind is already giving you that opportunity.
The Wind Down
Now that covers most of the day.
What happens right before sleep is interesting too.
The first phase is your wind down period. This is your body biologically signaling that it's time to get ready for sleep.
For some people that might mean having dinner with family or friends. For others it could be watching television, reading, light exercise, or simply relaxing.
I'm not assigning times of day to any of these phases because they're different for everyone. I just want you to know they exist.
What I will say is that when the wind down phase starts to hit, that's probably a good time to start setting the markets aside. Maybe that's not the time to be digging through scanner results, chasing alerts, or trying to force trading decisions.
You're simply not operating at your optimum energy potential anymore.
The Melatonin Window
After the wind down phase comes the melatonin window.
This is when your body is producing the optimal amount of melatonin for you to sleep well and during the times your body naturally wants to be sleeping.
One of the things I love about the RISEapp is that when I wake up in the morning, I can look ahead and see my estimated melatonin window. After years of tracking my sleep, it's become surprisingly accurate.
Sure enough, those are often the exact times when I'm sitting on the couch with my husband watching Netflix and I start falling asleep.
So don't get angry with yourself or frustrated if you're falling asleep while watching TV or scrolling social media. A lot of times that's simply your body telling you that your melatonin window has arrived.
Biological Night
Finally, we enter biological night.
Now this is different from nighttime being dark outside or what the clock says. We're not talking about the wall clock. We're talking about your body's response to the light out in the world.
Biological night can be one of your best friends if you're able to take advantage of it.
Now I understand life happens. Some of you have children or grandchildren to care for. Some of you have aging parents. Some of you have schedules that don't line up perfectly with your ideal sleep routine.
This isn't about being perfect.
It's about asking yourself, “How can I take advantage of my biological night as often as possible?”
For me, this gets thrown off when I stay out late at a networking event or a party. The important thing is that I don't get stressed about those occasional one-offs.
In a lot of ways, it's similar to trading.
One loss here and there usually isn't the problem. The problem is not having enough winning trades repeatedly over time to cushion those losses.
Sleep can work the same way.
Pay Attention to the Pattern
This was information that I honestly didn't know until I started tracking my sleep.
What surprised me most wasn't necessarily the sleep data itself. It was seeing how predictable many of my energy patterns were throughout the day.
My hope is that this inspires you to start paying attention to your body, your sleep, and how those things may relate to your trading results.
Again, the app I use is called RISE, and I've found it incredibly helpful.
Here's to a better understanding of your energy potential and how it may support your trading.
👉 PS — A Little Different Than Our Normal Tuesday
Today would normally be Ticker Request Live day.
Instead, we're using this week as an opportunity to revisit a few past broadcasts and gather feedback for the first Ticker Request Live Companion Guide.
If you'd like to join in, take a look at today's other emails from me. Pick a replay, spend some time with it, and let us know what concepts, terms, or lessons you'd like to see explained in more detail.
I'm excited to see what stands out to you! See you back live June 16th!
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