If you based your perception of what trading is like on the frenzied floor action at the NYSE, you may be sadly disappointed at the truth. Trading can be a slow and boring endeavor. And slow market action can make it even more boring.
You don’t need to trade constantly
Before we get into how to handle slow market action, I want to first address the traders who feel the need for constant activity. You don’t need to buy or sell nonstop to make money. If you do, you’ll just churn your account. Before long, your portfolio will bleed out, and you will lose all that hard-earned capital that took so long to accumulate.
With only 6 1/2 hours in the trading day, we don’t have much time for excitement. In fact, trading is a lot like playing Texas hold ’em poker. The days and weeks are filled with time when we do nothing. And then there are moments when we must be on our toes.
Robert Varkonyi, who won the 2002 World Series of Poker, once said, “Hold ’em is just hours and hours of boredom and moments of sheer terror.”
Just because you’re bored doesn’t mean you can afford to be complacent. You need to be ready for the moments of sheer terror, like a huge run-up in a stock or a massive selloff intraday.
How to handle slow market action
First, recognize when market action is slowing down.
Second, realize that this means it is time for you to slow down, too.
Third, simply wait for better conditions.
I have learned the hard way to patiently watch the markets and let it guide my trading. By doing this, I know when it’s time to trade and when it’s time to step back and wait.
During these slow times, which happen more than you may expect, I follow the charts, look for technical cues about the market condition, and plot out multiple strategies. In other words, I get ahead of the game and so I am ready when it is time to make my next move.
Try this approach. It will keep you busy, and you may not even notice how “boring” the markets are.
