Learn to Trade…Even When There Are No Trades

When I mention the word "Trading," what are the first thoughts that pop into your head? For most, it's all about the hustle and bustle of the markets, the flashing of signals on the screens, and taking timely actions to execute trades in the heat of the moment. But few traders, if any, will reflect upon the fact that a majority of their time spent "Trading" is actually spent waiting; sitting idly by in anticipation of valid trade signals being presented by the markets.

This is important because of the all-too-common misconceptions that, 1) Successful traders are constantly in the markets and taking trades; and 2) To learn to trade is all about knowing what to do to facilitate actual trade planning and execution. But I'd submit to you the opposite, that more good can possibly be done by learning how to wait patiently for trading opportunities, stay alert and purposeful, and most of all, to avoid impulse trades and "forcing" non-qualifying set-ups purely out of boredom.

You may trade once this week (or not at all), or perhaps multiple opportunities will be presented in succession. But regardless, you can learn and improve, if not from your experiences in the markets, then from improving your process that occurs in between trades. Here's why your actions during this time are every bit as critical as when making actual "trading" decisions, and a few habits of successful traders that you should strive to emulate.  

You're Still Trading…Even if You Have No Positions on

Because "Trading" implies action, many become conditioned to believe that if a day passes during which they don't place an actual trade, it means they didn't trade that day. But think of it this way: Every time you so much as examine the markets, you make many conscious (and perhaps unconscious) decisions, all of which have some degree of impact on your trading.

Maybe it's as simple as noticing a key support or resistance level that may be tested in the days or weeks ahead, or passing on a non-qualifying trade set-up because it fails to meet your standards for trading. Those are both trade-related decisions, so even though they don't (yet) result in a trade being taken, the trading day is not wasted. Just the opposite, in fact, because you gleaned useful information, avoided undue risk of loss that would've resulted from executing a sub-par trade idea, and gained experience in the markets. You traded that day, even if you didn't happen to execute any trades.

So make it your belief, starting with when you learn to trade, that it counts as trading, even if you don't put on any positions. And on those days, just like every other, be attentive, build knowledge and experience, and use the inevitable time in between trades to develop good habits, like those that follow.

See related: 5 Mistakes New Traders Make Every Week

3 Things Good Traders Do in Between Trades

We've discussed previously that the difference between successful traders and those who struggle or fail isn't in how they handle winning trades, but how they handle the "other" trades. And for this reason, down time, or the period in between trades, can be a trying time when it's all-too-tempting to start breaking the rules in order to get money working again in the markets.

But rather than straying from their strategies as they wait for new trading opportunities, these behaviours are what help successful traders profit more by losing less often, and would stand to make an immediate, positive impact for you in your trading by doing the same.

• Build a Watch List - See price action moving toward key support or resistance where a viable trade set-up could be presented? Well then, open up your currency watch list and make a note of the specific price level, the direction of the potential trade, and perhaps the signal you'll be looking for (i.e. pin bar reversal) in the event price does reach that level. Actively building your watch list in between trades will help keep you engaged and prepared to trade at the proper time, all the while avoiding impulse trades or trying to justify a sub-par set-up as being "good enough" because there are no other viable trades to take at the time.

• Manage Existing Positions - Not coming up with any new trades to take that session, but have one or more open positions already? That's an excellent time to check up on those positions, making sure you're managing the trades according to your plan. Maybe a new bar has printed and it's time to trail your stop in order to break even or lock in profits. Perhaps price has reached your initial target and it's time to scale out. Or maybe you can simply take this opportunity to assess where that trade is currently, and make sure you're prepared to manage that and any other open trades in compliance with your plan.

• Resist Temptation - Perhaps most of all, successful traders—and lifestyle traders, especially—accept that a day without any new trades is a level trading day, which is a perfectly acceptable outcome. It's far better than losing, right? So think about this even as you learn to trade so you adopt the belief that in many cases, the decision not to trade at all is the best trade decision you can make. And whenever you have a trading day during which you wind up not trading, that's not a lost day; it's very likely a day well traded on your part.

Honestly speaking, the markets have looked quiet these last few days, with currencies like GBP/CHF and USD/HKD only now nearing key levels, and UK and US equities trading at/near all-time highs. Opportunities are scarce, but we'll promptly notify Lazy Trader members as soon as viable trades are presented once again. Join our community using the banner below to be among the first to receive these trade ideas in real time.