When the Market is Quieter than Usual

Today’s article is more of a brief reminder than anything else.  Some traders feel compelled to trade every single day.  They feel they absolutely need to never miss and trade and therefore they start to spend more and more time hunting for trades.  This leads to forcing bad trades.  If the trader was presented with an endless stream of amazing trades then they would never feel the need to hunt for trades and take mediocre trades.

But, one must stop themselves and remember that the market is ever changing.  Sometimes the market is “HOT” while other times the market is “FLAT” and even more times when the overall market is “DOWN”.  As traders we look for the best opportunities and to be honest, sometimes the best opportunities are just holding onto your capital instead of risking a poor trade setup.  

We talk about Capital Preservation because capital is the lifeblood of a trader.  Without capital, you’re a speculator.  That being said, we also don’t like a pile of fiat because a pile of cash is not making any more cash.  It’s still just a pile of cash.  We want out capital working for us and for our capital to get to work, we need to be trading.

This is where the fine line comes in.  When is it more beneficial to NOT TRADE.  The answer is simple – when you don’t have any good trade setups.  Now, if only it was that easy.  If we were all computers and completely void of any emotions, it would indeed be easy.  But we are all human (at least I hope so) and so we carry along the baggage of emotions.  Traders get greedy, they get bored and they start making some poor decisions just for the sake of being in a trade.  

Something like this can be combatted by simply providing yourself something to do.  Clean the garage, go for a long walk.  Go fix something that broke a year ago.  Remember that wife and those kids – yeah, that’s your family… go say hi.

The point to drive home here is this: There will not always be a trade and that is ok.  Conservative traders run into this often because they usually wait for a few combinations of confirmations before entering a trade and when you are either in a sideways market or a market with out a clear trend, this can take a log time to get all those markers to line up.  Overtrading is BAD and we like to avoid bad at all costs.  Just remember, the most successful traders in the world Do Not Trade Everyday!