Trying Too Hard in Your Trading

One of the most common mistakes that ALL traders make at some points in their career is trying too hard. That in itself costs more money and causes more big losses than most other factors, combined.

Human nature creates expectation for pleasure = success, profits, wins, rewards every single day from every effort expended in trading. We are wired to dislike loss, failure, delayed gratification, slow progress, setback. We are wired to seek at all costs an equity curve rising straight up like a hockey stick from left to right with nary a pause at all.

But the reality of our profession is anything otherwise. No one with zero exceptions, ever, can be profitable every day. Depending on prevailing market conditions, being profitable half the time is a challenge. And it is also plenty enough.

Stock market volatility levels are at extreme low VIX readings right now. That is a true barometer which tells us that real opportunity for profit comes in brief, often scant amounts per day while remaining time that ticks off the clock offers no true edge in sideways, range-bound price (in)action.

Higher volatility periods of market action offer many more opportunities to profit. You can trade more, make more little mistakes and overcome them with enough correct actions in the end. But low volatility periods are different. You cannot take many trades and expect to prevail, because many real opportunities to profit simply do not exist.

Most individual traders hate to hear this simple truth, and they resist the message with every fiber in their conscience mind. But the truth remains rock-solid, regardless. All days in the market are not created equal. They are different as snowflakes. During low volatility periods, you might only have one to three sessions per week where solid profits potential exists. You might easily have three – four sessions where little to no profit opportunity exists. That fact is resolute across ALL systems, methods and outright wild-a** random guesswork efforts for trade-entry and execution.

There are no exceptions. When price action flat coils sideways thru a no-range zone for hours on end,. nobody can make any money on a frequent, consistent basis. Nobody. So why would you or anyone else think they can be an exception to this timeless, universal law of trading and markets?

August is generally considered one of the slowest months for day-trading. I agree that it can be that. However, there is still plenty of opportunity for profits overall. And even if it is a slower time for price action, that is an ideal time for learning, practicing, studying and honing your trader skills. By far the WORST time to learn about trading is during peak volatility periods. You need to have your s(tuff) together long before that, so you can capitalize on high production periods when they come.

I know everyone inside here realizes that the fallacy of “earn while you learn” is nothing more than foolishness when it comes to trading. People who think they can wait until prime-time arrives and then simply make money straight thru while learning to trade high volatility periods are precisely the ones to pad our fattened trading accounts with their losses => our gains.

So let’s use this calendar month of August as a springboard towards improved trader performance.

For more daily updates from Austin, visit his blog at Coiled Markets.