When it's time to go fishing

This definitely depends on what type of strategy you are trading with. Some day traders can trade every day throughout the whole year. Some traders really depend on market environment. For my style, the more trend-following type of trading, you definitely want a trending market. And that doesn't happen every day, week, or sometimes even for months. Heck markets can go flat or down for year(s).

Dan Zanger, great trend follower, said something interesting about this in an interview from 2005. At 01:07 Dan says: "I really have found that the market may have two big moves during the year, and they may last, 6,8,10,12 weeks, and other than that they just exhaust themselves after that. And really, the rest of the time the market is just consolidating the gains. So, um, the big lesson for me this year has been, you know, just to trade less."

Let that sink in because for me this made the waiting a lot easier. This means there will absolutely be days, weeks, months, sometimes maybe longer where you will be doing almost nothing, staying in cash while of course staying in sync with the markets.

Effort != reward

We as humans are conditioned in our daily lives about how effort == reward works.

Study harder at school, get better grades. Do more work, more hours, more and better results at your job and you might get a promotion or bonus. Action and effort result in linear rewards.

With trading this is one of your biggest enemies. The market does not care about how many hours you are screening stocks, how many trades you take or how hard you try. In sideways markets for example, 100% action gives negative results, while 0% action, keeping a cash position protects your capital. Having 0% profits on your account means in some periods that you are outperforming the markets.

Mark Douglas writes about this in his book Trading In The Zone: "Any degree of blaming means you have not accepted the reality that the market owes you nothing, regardless of what you want or think or how much effort you put into your trading."

How much effort you put in doesn't mean anything, the market won't reward you more for it. It's simply there, outputting information you can react to.

More action can help you in the beginning

When starting out studying markets, other traders, strategies, books, old charts and what not, does help. I mean you need to learn so you have to put in the work. But at some point when your rulebook is written down and you have certain rituals you do, it becomes more repeating that same thing over and over again instead of putting all the work in to learn everything.

How to deal with this

Now knowing we have to wait a lot for things and be patient all while wanting to take action to have great results, we need certain ways to deal with this.

The way I deal with it is as follows:

Missing things is OK
During flat or down markets other sectors might appear to be breaking out. More defensive sectors like energy, oil, gas, metals & mining etc. This is mostly money flowing out of growth sectors towards more defensive sectors.

There are sometimes some stocks that take the same growth characteristics as say a tech company and there might be some setups you could make money on. But keep in mind that the biggest part of these sectors are not necessarily fast scalable and growing companies. It takes years to open a new gold mine or build an oil processing plant. Growth in these type of markets is slow.

It is OK to miss things. Really it is. Seeing a certain group of more defensive stocks fly while the market trend is not really there is OK. You might feel FOMO for not being in them but you don't need to catch every trade to have great results at the end of the year.

Every bull market there are multiple big gainers, even catching all these would be unnecessary and will leave you with way too small positions on all of these stocks to move the needle anyway.

Accept that you will miss things. Missing opportunities is good risk management. It's the price you pay for protecting your capital.

Distract yourself
Jesse Livermore said it best: "There's a time to go long, a time to go short and a time to go fishing."

When markets are not behaving in a way you need them to, to be able to trade, just do something else to take your mind off it.

You can of course put your need to take action into other parts of trading like:

• Reading books
• Watching videos about trading / interviews
• Studying other periods in markets and old charts
• Studying your own trades
• Writing a blogpost about a certain trading subject

At some point during these type of markets I have done all of the above the past few days. That really means it's time to just go fishing, doing something else non-trading related like:

• Focusing on your 9-5 job if you have one
• Family and friends
• Hobbies / sports
• Gaming
• .... etc.

But stay focused!

Now given all this you should not start let your guard down. Don't skip on your daily and weekly rituals. You need to stay in sync with what the market is doing and all the stocks that might be forming great setups.

You have to be patient but stay focused. Markets may not trend for months but then in a couple of days things may start looking real good.

Disclaimer: The content of this blog is for educational and informational purposes only and does not constitute financial advice. The author is not a certified financial advisor. All analysis is based on historical market data and technical methodologies. Trading stocks and cryptocurrencies involves significant risk. Always do your own due diligence and consult with a professional financial advisor before making investment decisions.