If you buy a stock believing it will go up, and shortly after you buy, it immediately goes down, It is much easier to think clearly having enough sleep when you have to face a decision and analyze several factors quickly, and as accurately as possible for the best outcome in a given situation. It's not easy to think fast and through emotion - confusion, shock, dismay, or anger when your brain is not functioning at near full, or preferably full capacity. The Trading Legend Jesse Livermore wrote about this very subject. I have chosen my favorite quotes of his related to the Health and Trading the Stock Market. What you have to observe and interpret include things like, what are the major index levels, what is another company's stock in the same industry doing, what are the volume levels - is the decline because investors are generally selling at the same time, or is it because the market is in a reaction after a strong rise. It takes strong thinking to recognize what's happening in the Stock Market. Often the true reason for a heavy rise or fall in the Stock Market, doesn't come out until weeks later. A Stock Trader always has to consider this possibility as well, and act upon instinct and experience for making Trading decisions, under these circumstances time and time again. Sleeping enough helps the thinking process stay sharp for stock trading.
Sleep and Stock Market Success
I have known about this rule for many years now. I remember staying up until 1:00am every night reading headlines, watching the Asian Markets or the European markets (Europe's Markets open 12am if you're in California). I would stream Bloomberg news from the internet and listen, watch, research, and document my ideas and potential leads for what stock to pick or what industry to focus on. I would then go to sleep for about 5 hours, wake up at 5:30, start reading the Wall Street Journal and New York Times (I loved that they delivered the paper as early as 4:30am) looking for potential leads or companies that I could watch throughout the day, looking to see how or if it reacted to news, what volume levels would be like trying to quantify if at all possible, the added attention a news story or article in the paper could exert on that stock's trading volume for that day or even that week. Livermore who I mention above, also had plenty to say on Newspapers.
As a stock market operator who worked in secrecy, he would later reveal how he used newspapers in relation to his Stock trading skills. read about how this extraordinary Stock Trading Master Used Newspapers in relation to trading the Stock Market. Each morning as the market, opened, I felt well prepared for the trading day....or so I thought. I was right about a lot of things I thought the market would do, but I was also wrong on a lot of things I thought it would do. When I made profitable trades, I was content, but that was not how it was in the beginning! Feeling like you're prepared and then losing money in your trades can be discouraging. I learned that having enough sleep was part of being prepared, something I wasn't doing and was making me unprepared to trade in the Stock Market. I do know now!