Ask the Coach  #3

“Managing the Summertime Doldrums”

Trading Situation:  So many times during our trading we run into the dilemma of “quiet times” where the market gets very slow. This is the prime environment for the anxious trader to raise its ugly head. Learning to manage this is very important especially during the summertime when the markets experience lower than normal volume resulting in less volatility. 

Trader Background: Ted‘s trading day has been off and he has taken trades he knew were not fitting into his normal strategy or rules, which has now had a negative impact on his bottom line, but he took them anyway. The end result has been a series of bad trades, high anxiety and of course heading straight into the negative mindset or the “beat-myself-up” mode.

Trader Comment:

“I have been driving myself crazy and can’t seem to get in control.  I started the month down and have been trying to get the money back ever since. The results have been terrible. I keep taking trades that go no where.  I am over trading for sure and can’t seem to stop the bad pattern. How do I stay in control when the market is so dead and not moving? Why do I keep doing the same thing, I must be a bad trader.” Ted

Coaching Feedback in color: T- Trader C - Coach

T- “I have been driving myself crazy and can’t seem to get control.  I started the month down and have been trying to get the money back ever since. The results have been terrible. I keep taking trades that go no where.

C- What Ted is describing is what I call “pushing” trades. What I mean is, a trader will force trades into the market when they know there’s nothing there. You know, like trying to put the square peg in the round hole.  They maybe second guessing the market or attempting to get back the losses quickly when there is no follow through in the markets because there is a lack of momentum.  We all know momentum comes from volume, no volume no movement. The trader is “pushing”. In this situation patience is critical to master as a mindset.  

  T- “I am over trading for sure and can’t seem to stop the bad pattern. How do I stay in control when the market is so dead and not moving?”

C- This is very common especially during the summertime when traders take their vacations and their associates trade their desk with smaller than usual volume which leads to a slower momentum. Affectionately called the “the summertime doldrums”. 

At this point it’s important to keep an eye on the market not trade outside your strategy, and become what I call a “digger”.  A digger is a trader that continually looks for new indicators to fine tune their strategy.  They test different ideas and learn something new each day. Idle time is the culprit and keeping the mind occupied is critical or else it gets “hooked” into taking trades that aren’t there. This then leads to bad patterns of trading, or one a series of losers.

 T - “Why do I keep doing the same thing, I must be a bad trader.”

C- No Ted you are not a bad trader just an anxious one.  The market is a very seductive place when it comes to money and our relationship with it. Staying in emotional control is so very important.

Another important thing is to not beat yourself up or go into the “poor me” zone. This does absolutely nothing for you or your trading. It only prolongs the pain of the moment.  So just let it go and get inquisitive in your quest for a solution.

As trader’s we need to be kind to ourselves, even pamper ourselves when things are a bit off.  Focusing on changing the approach, or better yet find the answer to these questions: “What can I do in this moment to keep myself occupied and not over trade?” and “What can I see on my screens that would make my strategy even better.”   

Rule: Be kind to yourself, always. You deserve it.

Method is designed to:

·        Relax emotions

·        Gain control

·        Use idle time wisely

·        Learn something new

·        Reduce losses

Solutions:

1-     Become a digger and look for different signals to improve your strategy.

2-     Don’t over trade and if it’s slow and you can’t manage your mind set it might be better not to trade.  Take a day off and relax, remember the market will be there when you get back and you will feel better.

3-     Keep your mind occupied and try listening to music, read a book in the off time.

4-     Set alerts you for when the market does kick in and be ready.

5-     Be kind to yourself.  

6-     Learn something new each day, write it in your journal, and re-read it in the morning.  This speeds up the learning curve.

    And as always “Great Trading!