Trade Smarter: Is the “Juice Worth the Squeeze?”

"Is the juice worth the squeeze?" is basically a reminder to ask yourself whether whatever you're doing is truly worth the effort and likely to produce a payoff that's consistent with the time, resources, and "sweat equity" you're pouring into it. If so, the time and effort is being well spent, but if it's extraneous or futile, well then, you could stand to work or trade smarter.

For traders, of course, things work a bit differently. It's not like we can just focus our full attention only on set-ups and trades that are going to pay off, since we have no way of knowing that in advance. However, there are still plenty of times when it may pay to ask yourself, "Is the juice worth the squeeze?" to avoid devoting valuable time and resources, not to mention your hard-earned capital, where it may not belong. Here are some of those times…   

Trade Smarter With Risk/Reward Analysis

Trade selection seems like the most obvious time to consider whether the "juice is worth the squeeze." You'll instantly trade smarter, after all, just by eliminating ill-advised set-ups and trades that can be, for whatever reason(s), classified as a waste of time, money, and/or effort. Novice traders tend to focus on reward far too much and not focus on risk enough. Now certainly, reward/risk profile is one of the foremost qualifiers of a worthy trade set-up…but it's far from being the only one:

Technical prowess

For Lazy Traders and technicians alike, the technical merits behind a trade define the basis for whether or not we take it. If it's a weak signal, or only some of the required factors are lining up, then it can be said that the trade in question isn't worth the investment. To trade smarter, wait for all the required factors to line up. For example, a strong chart pattern like a pin bar reversal occurring at key support or resistance, perhaps with moving average or RSI confirmation, and agreement across multiple time frames would indicate a stronger and more worthwhile trading opportunity.

News and fundamentals

Many Forex traders may carefully assess the impact of the most recent or upcoming economic data, the path of central bank monetary policies, and even fundamental or intermarket factors like equities, bonds, and oil prices when trading all or select currencies. Meanwhile, some—like us, for example—trade smarter by following the news, but not letting it have a decisive impact on trade selection. There's no "right" way; the point is just not to break one's own rules and overlook key factors in the name of trading (or not trading) a given set-up.

See related: Should Traders Follow the Financial Media?

Long-term trade profile

Especially when trading longer-term, it's often advisable to zoom out and examine price action on long-term charts like the weekly and/or monthly. The big-picture perspective is a very valuable one, indeed, and anytime you can trade in line with the prevailing trend, there's added confidence to be had.

Trade Smarter by Maximizing Your Time & Efforts

It's really quite funny that for all the countless hours many spend trading the markets, only a matter of minutes gets devoted to executing actual trades! That's because our efforts are so often being devoted not just to analysis and searching for opportunities, but also to continuing education, skill building, and developing a deeper knowledge about the markets and our own trading methodologies. And here, then, is another area where could all stand to trade smarter.

Ask yourself if the "juice is worth the squeeze" whenever you're studying new set-ups, patterns, or trading signals, perhaps in hopes of adding them to your arsenal. Consider whether it's something that fits naturally within your strategy, if it's something that applies to the assets, markets, and time frames you trade, and if it has a proven track record for success to begin with.

Do not chase your tail...

Too often, traders waste time and energy chasing whatever trade, pattern, indicator, or method is receiving hype in the media or on the internet, only to have the hype fizzle out soon after. Trade smarter by only pursuing new or additional methods that are proven reliable and useful for you and the way you trade, and don't chase the flavour of the week just because everyone else is!

Also, think very seriously whether the "juice is worth the squeeze" whenever considering the purchase of new trading products and services. Do you really need more or different software, additional indicators and variables to consider, or some mysterious, black box system that promises results that almost sound too good to be true?

In the end, you can likely better utilize your resources and protect physical and emotional capital just by being vigilant about how you spend your time and energy. And, in that respect, even when not executing trades, considering whether the "juice is worth the squeeze" can still help you trade smarter.