To Trade or Not to Trade?

(With apologies to William Shakespeare in this 500th anniversary year!)

ShakespeareTo Trade or NOT to Trade?

To Trade or NOT to Trade, that is the question;

Whether ‘tis nobler in the mind to suffer

The drawdown and losses of unplanned impetuous trades,

Or to wait with patience for higher probability setups,

And then to plan and trade them with discipline and calm,

Whilst managing your Risk and being focussed on the process,

And as a consequence, reap fine rewards for one’s labours!

Hamlet by ShakespeareThe struggles and contradictions of Hamlet may well be reflected in Trading.

To Trade or Not to Trade? That is the question most frequently faced by traders. Do you force the market or do you do something else?

Just because we as traders are available and ready to trade, doesn’t mean that markets at that precise time or period are in a fit state to trade.  One common mistake of novice traders is to try and force the market to give them a trade and they convince themselves to take a trade based upon sketchy information.  As traders we need to be able to recognise when a market is tradeable or whether the ‘Best Trade of the Day or Session’ is actually No Trade.

That also doean’t mean you sit in front of your terminal and do nothing except stare at a screen.  You can either get up and do something else and come back later or the next day or do some Fundamental and Technical Analysis and start to produce a Watch List and develop some ‘What If’ scenarios, so that when the market is in a fit state to trade then you will be better placed to spot more favourable, higher probability trading setups.

Alternatively you could open up Forex Tester and start back testing to gain some real stats on those strategies you use or even improve them or develop your own ones.

Remember that preservation of your trading capital is your 1st priority and by not trading when it is difficult to see which way the market is going/or going to move, you will support that.  Other wise you might as well just take a coin and toss it in the air and if it lands on heads up, then go long or tails up, then go short!

Top Trading Tip:  If it is not reasonably obvious to see decent trading opportunities then most probably there aren’t any, so don’t trade and save your capital for another day and go and do something else rather than wrestling with the above question inspired by Shakespeare’s Hamlet.  Above all when in Doubt Stay Out and try hard not to let your equity curve become a Tragedy!