The idea that staying OUT of the market is a means of making money in trading sounds completely counter intuitive, but yes, staying out of the market is very often the most profitable option.
In trading it is far, far easier to lose money than make it. Novice traders all too often believe that it is a fast track to wealth, and the way forward is simply to start trading, in earnest. With a hunger for success many hours will be spent glued to the charts in the eager belief that there must be at least one or more trade set-ups staring them in the face waiting to be taken, that time away from the charts equals missed opportunities. After all it makes sense to our conventional mind-set that time at work equals money earned, and the more time put in the higher the pay. The markets however don’t work like that, and it is this very eagerness to keep trading, no matter what, that is always the undoing of novice traders.
Staying out of the market, until the conditions are right, is the key to success. Trading, because you feel you must trade in order to be a trader, will only lead to disappointment and pain.
In order to understand what ‘staying out of the market until the conditions are right’ means, it is necessary to have some form of measurement or yardstick by which you can judge the conditions of the market, and whether the conditions are appropriate for trading. This is a first and fundamental step. It is known as a strategy and encapsulates your understanding of market conditions and whether they are appropriate for trading in the style that you like to trade; i.e., end of day or during the day.
There is a well-known saying in trading that states the order of priority is capital preservation FIRST, then capital growth. This is derived from the ease with which it is to lose capital. Therefore unless the market is doing whatever it needs to do to tick all the boxes of your strategy and trade plan, then staying out of the market is paramount. There is a lot of talk about the need for discipline in trading and this is exactly why: staying out when you know you should is really important. Do not allow yourself to be tempted. Easier said than done, especially if a trade has not been placed for a while, but it is the discipline to stay out when you know you should that makes the difference between long-term capital growth and loss. A novice trader will tend to be frustrated by staying out the market if conditions aren’t right; the professional or seasoned trader will simply recognise the opportunity to preserve capital, but remain vigilant to the opportunities when they do arrive, choosing only the very best set-ups with the highest probabilities of success.
In trading quality is always the preferred option to quantity. For long term success, and peace of mind, it is the only option.
In trading it is far, far easier to lose money than make it. Novice traders all too often believe that it is a fast track to wealth, and the way forward is simply to start trading, in earnest. With a hunger for success many hours will be spent glued to the charts in the eager belief that there must be at least one or more trade set-ups staring them in the face waiting to be taken, that time away from the charts equals missed opportunities. After all it makes sense to our conventional mind-set that time at work equals money earned, and the more time put in the higher the pay. The markets however don’t work like that, and it is this very eagerness to keep trading, no matter what, that is always the undoing of novice traders.
Staying out of the market, until the conditions are right, is the key to success. Trading, because you feel you must trade in order to be a trader, will only lead to disappointment and pain.
In order to understand what ‘staying out of the market until the conditions are right’ means, it is necessary to have some form of measurement or yardstick by which you can judge the conditions of the market, and whether the conditions are appropriate for trading. This is a first and fundamental step. It is known as a strategy and encapsulates your understanding of market conditions and whether they are appropriate for trading in the style that you like to trade; i.e., end of day or during the day.
There is a well-known saying in trading that states the order of priority is capital preservation FIRST, then capital growth. This is derived from the ease with which it is to lose capital. Therefore unless the market is doing whatever it needs to do to tick all the boxes of your strategy and trade plan, then staying out of the market is paramount. There is a lot of talk about the need for discipline in trading and this is exactly why: staying out when you know you should is really important. Do not allow yourself to be tempted. Easier said than done, especially if a trade has not been placed for a while, but it is the discipline to stay out when you know you should that makes the difference between long-term capital growth and loss. A novice trader will tend to be frustrated by staying out the market if conditions aren’t right; the professional or seasoned trader will simply recognise the opportunity to preserve capital, but remain vigilant to the opportunities when they do arrive, choosing only the very best set-ups with the highest probabilities of success.
In trading quality is always the preferred option to quantity. For long term success, and peace of mind, it is the only option.
Editors’ Picks
EUR/USD extends its downside below 1.0650 on hawkish Fed remarks
The EUR/USD extends its downside around 1.0640 after retreating from weekly peaks of 1.0690 on Friday during the early Asian session. The hawkish comments from Federal Reserve officials provide some support to the US Dollar.
GBP/USD remains on the defensive below 1.2450 ahead of UK Retail Sales data
The GBP/USD pair remains on the defensive near 1.2430 during the early Asian session on Friday. The downtick of the major pair is backed by the stronger US Dollar as the strong US economic data and hawkish remarks from the Federal Reserve officials have triggered the speculation that the US central bank will delay interest rate cuts to September.
USD/JPY rebounds from 154.00 as investors digest fears of Japan’s intervention
USD/JPY finds buying interest near 154.00 as investors see Japan’s intervention mere a temporary solution to support weak Japanese Yen. Japan’s National CPI data will impact market expectations for BoJ’s rate hikes. The US Dollar corrects despite the Fed is expected to keep interest rates higher for a longer period.
Editors’ Picks
AUD/USD pressures as Fed officials hold firm on rate policy
The Australian Dollar is on the defensive against the US Dollar, as Friday’s Asian session commences. On Thursday, the antipodean clocked losses of 0.21% against its counterpart, driven by Fed officials emphasizing they’re in no rush to ease policy. The AUD/USD trades around 0.6419.
EUR/USD extends its downside below 1.0650 on hawkish Fed remarks
The EUR/USD extends its downside around 1.0640 after retreating from weekly peaks of 1.0690 on Friday during the early Asian session. The hawkish comments from Federal Reserve officials provide some support to the US Dollar.
Gold price edges higher on risk-off mood hawkish Fed signals
Gold prices advanced late in the North American session on Thursday, underpinned by heightened geopolitical risks involving Iran and Israel. Federal Reserve officials delivered hawkish messages, triggering a jump in US Treasury yields, which boosted the Greenback.
Runes likely to have massive support after BRC-20 and Ordinals frenzy
With all eyes peeled on the halving, Bitcoin is the center of attention in the market. The pioneer cryptocurrency has had three narratives this year already, starting with the spot BTC exchange-traded funds, the recent all-time high of $73,777, and now the halving.
Billowing clouds of apprehension
Thursday marked the fifth consecutive session of decline for US stocks as optimism regarding multiple interest rate cuts by the Federal Reserve waned. The downturn in sentiment can be attributed to robust economic data releases, prompting traders to adjust their expectations for multiple rate cuts this year.
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