Getting Yourself Out of a Rut in Trading

Written by Author

On May 11, 2020

Have you ever been stuck in a rut with trading?  You’re trying to progress, but you just feel like no matter what you try you’re not getting anywhere.  This is not a fun place for any trader to be and it is definitely not good for your mental well being.

If you feel like this is a position that you are in currently, don’t blame yourself.  In case you haven’t noticed, our markets haven’t been all that directional lately and it can be difficult for traders who try to hold for duration to achieve their goals.  This article contains suggestions for how you might reinvent yourself during times like these.

Things to consider:

  1. What is the current market condition?
  2. What is your trade style?
  3. Taking a break/vacation
  4. Review your Trade Journal
  5. Back to basics 

1. What is the current market condition?

When you are trading, it is always a good idea to evaluate the greater overall market from a high-level perspective.  Is the market truly bullish?  Is it truly bearish?  How extended are we in the trends? Are things really only moving sideways? Are traditional relationships holding?

Evaluating these things will enable you to key into an appropriate approach for the market.  If it is range-bound, then of course you would need to decide whether you will play within the range or wait for a break of the range.  If you are seeing that typical market relationships are not holding, you may need to identify charts that illustrate new relationships and potentially evaluate each instrument individually rather than relying on the relationship.  When I am speaking of relationships I am speaking of things like the relationship between the $USD and Gold, the $USD and Crude, Crude Oil and the Stock Market, the S&P and the JPY… these are the relationships that most people tend to look at for ideas. Sometimes they don’t hold their correlation as well as we might like them to and there becomes a need for reevaluation.

Analyze your current market and decide what strategies may/may not work in these conditions and decide which relationships you can/can’t include in your day to day trading.

2. What is your trade style?

If you are a Swing, Intermediate or Position trader, then a sideways market like we have been experiencing becomes a nightmare for your trading.  You just can’t seem to hit it out of the park and the reason is nothing that you can overcome; it is simply the wrong market for your trade style.  Realizing where your trade style fits in the scheme of things is important.  You might not find a Position trade every single day, which means that you may have to employ patience or even evaluate altering your trade style to become a bit more active until the market returns to absolute trends.

3. Taking a break/vacation

This is something that you may truly need.  Sometimes after banging your head against a wall over and over again with no beneficial result and no change in the market or your trades, you might just need to step away from the mouse for a little while.  Taking a step back, walking away from the desktop for a few days could put your mindset back in a positive place, perhaps even a more objective place.  The worst thing you can do as a trader is be subjective and sometimes we find ourselves there.  Going to the beach or the mountains for a few days, if you can, is a great way to realize an element away from technology and separate yourself from the issue for a little while.  You can come back with an objective approach and rejoin the markets ready to follow your trade plan.

4. Review your Trade Journal

Making and keeping a journal is an invaluable process.  This type of snapshot of your trades will assist you over time in seeing not only your mistakes as well as providing an engaging analysis of your winning trades.  If you find yourself in a rut, go back and review what you’ve been doing lately and what you used to do when you had greater success.  Again, remember that if your market is sideways, you may have to wait it out until a new trend establishes itself.

5. Back to Basics

If you find that no matter what you do you are truly getting nowhere, or you are too afraid or confused to take a trade because of all of the complex indicators you are using, you may just need to simplify the process and go back to basics.  Sometimes the best thing you can do as a trader is turn off the noise around you.  You might not need to listen to what other people are talking about and trading.  You might not need to look at 20 charts with varying indicators at the same time.  You might just need to come back to what a true simple entry looks like and what a true simple exit looks like.  Start small, as if a beginner again, and stay simple.  It is easy in these markets to get lost in all of the details and the numbers, but you can find yourself as a trader again if you come back to the beginning and back to true form of proper money management, basic entries, and basic exits.

These are just a few thoughts that might get you to find a new path or maybe even step back, take a break, and start over fresh.

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