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Here’s something I often hear from newer traders: there’s seemingly so much action every day, I feel like I have to be in it, I’m urged to trade!

I know exactly where you’re coming from… I also know exactly how most of those temptations end!

You don’t want to feel left out, so you force a subpar trade, and in very short order – you regret getting in, beating on yourself for losing money.

It’s not a fun place to be, so let me spend some time discussing why this happened and what you can do to get rid of this ruinous habit.

The Need to Trade

Look, if anything of what I’ve just described rings a bell for you – don’t be ashamed and don’t beat too hard on yourself.

The “need to trade” is a simple psychological fallacy that most traders fall into at some point in their careers.

After all, there are so many “outside” factors continuously putting pressure on you:

  • If you’re treating trading as a full-time job (as I’d argue you should be), you feel the pressure to do something vs. seemingly just wasting time behind a screen.
  • You are urged to generate cash flow
  • Whenever you pull up your browser, it feels like every Twitter poster and his dog brags about a great trade they just had – seems so easy, right?
  • It appears as though there’s so much action, yet you’re on the sidelines and feel left out.

This is very far from a full list of thoughts that have gone through my brain early in my career whenever I just sat at my platform and procrastinated.

Well, let me open up one of the greatest secrets I’ve grown to learn through a great deal of red trades and pain…

You Don’t Have To Trade

As a matter of fact, you shouldn’t trade!

Let’s get back to the absolute basics for a second – what is the job of a trader?

I can only speak for myself, but I’d describe it as something as follows:

  • Find good trading setups where you have an edge against the market
  • Identify good entry points and targets, to ensure limited downside and outweighing upside
  • Protect your capital by being disciplined with position sizing and following your trade plan.

Now, where exactly among those lines does it say that you have to sit there and look for trouble every minute of every day?

The whole point of trading is to take advantage of a few specific market situations that you know and understand very well – therefore, you have an edge in them.

It’s only fair that those won’t happen very often – competition and efficiency of the markets won’t allow profitable opportunities to arise all the time.

From my experience and experience of so many others I’ve seen and trained – in this business, patience truly pays off.

Be Ready, Not Greedy

Here’s a concept that may be a deal-breaker for many traders:

You should be waiting for a trade – not looking for one!

Your job is not to search for what to trade, but to know what to trade!

The biggest skill you can develop in this game is the ability to recognize a good opportunity.

Some of the best traders I know can sit for days on end without placing a trade, just observing the markets, but when all the stars have aligned – they attack the setup ferociously.

Not trading also doesn’t mean you aren’t doing anything – trust me, uncovering what works, adapting to the market, and looking for a perfect setup is time a lot better spent than that of digging a financial hole while trading subpar ideas.

The next time you want to place a trade just because it doesn’t feel right to sit on your hands – remember, it’s a lot better to be at zero than to be red.

Bottom Line

Look, if you’ve ever regretted trading, or caught yourself placing trades out of urge and boredom – don’t despair.

Learning to not trade when there’s no reason to trade is just another habit that every trader gradually learns into.

The best you can do is try and speed up your learning curve while limiting your drawdowns.

Next time you’re at your screens and want to jump into action, ask yourself: “Is this truly a worthy trade? Do I know why I’m putting my money at risk and is the payoff worth it?

If a detailed thesis doesn’t immediately come to your mind – chances are, you should skip the trade and wait for something truly good.

Author:
Jason Bond

3 Comments

  1. I have read a lot of your lessons and listened to hundreds of hours of your teaching and for me, “this” is a TOP lesson to impart on new (all) traders. Thanks JASON

  2. I’ve been learning that one the hard way, and now that I am too low to trade, I am watching the market very intently “on the side” to better understand and see opening bell patterns so that I can know when to sit on my hands and wait an hour, maybe another day. The closer to nothing, that I got the harder I pushed for a trade so that I could grow back. It backfired ….

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