How to Trade Stocks While on Vacation

If you're a short-term trader accustomed to buying and selling positions within a single day, you might want to just disconnect. After all, you won't have time for much else if you're constantly monitoring the market for profit opportunities.

It's a different story for swing and intermediate-term traders, who hold positions from a couple of days to several months, respectively. The question isn't whether to obsessively monitor your positions, but rather which order types you can use to protect your positions while you're away. The key is to add some built-in protection, so consider planning bracket orders—identifying your stop and profit prices—on every open position before you leave. This can help limit your losses if the market moves against you or lock in your desired profit if things go as you hope. Keep in mind that these types of orders aren't guaranteed to fill at the desired level.

If the answer is none, you should close out your positions before heading out, particularly if you'll be away for a while. Otherwise, you should be able to keep them open, with a bracket order in place, even if you have only a few minutes to check on them each day.

If that's the case, here's how to make the most of your limited time online:

• Each day, either after the market closes or before it opens for trading, briefly scan the news to see how the market is shaping up and if there are any developments that might change your views on your existing holdings.
• If your views have changed, consider altering your bracket order to align with your new thinking.
• You could also add a position, assuming you've done your homework and the price is right.

For the latter, use a conditional order—one that triggers a purchase only if certain conditions are met—and even then, place a bracket order to protect your downside and lock in your upside.

If you suspect your internet access may be unreliable, set up email or text alerts so you'll be notified via cellular service if certain market conditions are met. You can do this not only for price and volume changes but also for stop levels, margin warnings, and bid and ask prices. You can even set expiration dates for each alert to keep intrusions to a minimum (see "Alerts on the go" below).

Of course, if you think there's a chance your internet access may be compromised completely, you might want to play it safe and close out your positions ahead of time.

Let's face it: We all go through rough patches. Emotion can get the best of us when losses start to pile up, leading to some less-than-optimal trading decisions. At times like these, the best course of action may be to take a mental break—and there's no better time for doing so than a holiday.

Even if your trading portfolio has been performing well, it can help to step away from the screen. We've all felt the push and pull of watching market prices move minute by minute, and sometimes the best way to enforce discipline is to hang back and let your automatic orders mind the store.

The time away might also give you a chance to reflect on your performance. The storied investor Jesse Livermore, for example, made a point of locking himself in a Chase Manhattan bank vault the last weekend of every year to analyze all the trades he'd made over the previous 12 months. Nobody's suggesting you spend your hard-earned vacation inside a bank vault, but a little self-reflection without day-to-day distractions of the market can help recharge your batteries for when you do return to trading.