To trade or not to trade? Trading from home and having more time to watch charts and market headlines does not necessarily mean that you have to take on more settings.
For most traders, even seasoned professionals, this is easier said than done.
After all, Forex price action can often be fast-paced and exciting, and the thought of missing out on a profitable setup is enough to keep traders on their toes all the time.
Market processors Author Jack Schwager He mentioned in an interview:
“It is common for traders who develop good methodologies that indicate trades infrequently to make other trades that lack the proper criteria due to the need to do something.”
A Scientific study He emphasized that the challenge of doing nothing is just part of being human.
Through an experiment that included allowing people to choose between being left alone with their thoughts or subjecting themselves to a mild electric shock, the study concluded that “Most people seem to prefer doing something rather than nothing, even if that something is negative.”
Here are some situations when it’s better to sit and wait on the sidelines instead:
1. You feel bored and stressed.
If you find that you have nothing left to do at home after completing your Netflix list and peeking in the fridge for the umpteenth time, opening a trade just because it’s not really a good idea.
Unless your setup meets your tried and tested standards, you may end up risking your hard-earned capital on a low probability play just to convince yourself that you are being productive.
Still fidgety? Check out this list of 5 non-trading activities that can help your trading performance.
2. Your strategy is not suitable for the current market environment.
Using a trend-following strategy in a range-bound market is like driving a square peg into a round hole. It won’t be appropriate, and you’ll probably end up hurting yourself if you force it.
While taking advantage of different market opportunities is a big part of becoming a consistently profitable trader, it is equally important to have a clear business plan before you start setting up.
This means setting entry and exit levels based on the rules of your strategy and identifying conditions in advance that may invalidate your trading idea.
Not something that can be done right away if you are trading in an unfamiliar market environment, right?
3. You are on a losing streak.
Have you ever heard of revenge trading? This usually happens when a person is coming off a frustrating pullback and is trying to make up for it by being more aggressive in the next set of trades.
This poses a risk to your account for two main reasons:
Firstly, it leads you to throw out your trading system and take the losses personally.
Secondly, it can be a potential loss situation if your trading idea is wrong and your trading confidence is also damaged.
Now that’s just digging a deeper hole for yourself, and you don’t want that.
4. There is more uncertainty than you can handle.
Of course, there is always a certain degree of uncertainty in trading, but there are cases where there is much more than you are used to.
If you find yourself out of sync with what is moving the markets or unable to follow headlines that change sentiment, you may be better off just monitoring price action in the meantime.
There is no shame in admitting that you are missing something or that you need to do more research so that you can take more calculated trading risks.
Don’t worry, the market is not devoid of opportunities available to you to grow your account!