When Should a Trader avoid trading ?

By | December 9, 2017 9:08 pm

We have Gujarat Election going on, We will have Exit Poll results and Election results coming in next  tomorrow, markets are going to be volatile. Most of traders will be lured by the idea if one trade goes right i can make big money but one wrong trade can wipe off the whole account.

In trading activity alone does not make money, the right activity at the right time is what makes money. Many times the right thing, is to do nothing.

In your actual trading you have to do four things very well to make money.

Know when to get in.

Only enter trades that have the highest probability of risk/reward ratio.Risk to Reward should be defined with your trading strategy and your trading profile,Few traders do very good trading when volatility is high and few when market are in sideways mode. Know your trading style and trade accordingly.

You have to know when to get out.

When your trade reverses through a key support get out. When the market trend changes get out of your long positions. When your stop loss is hit, get out. When the stock reverses and hits your trailing stop, get out.

You have to know when to stay in.

If you enter a stock with the potential to trend let it run as far as it will go. Do not set a target, just trail your winner with a stop. Let the stock tell you when it is done running. Do not cut your winners short.

And most importantly you have to know when to stay out.

If you do not know what to do, do nothing.

  1. No Clear Signal from your chart reading, stay out
  2. Confusing signal generating from your system due to sideways move
  3. Volatility is escalating and you are losing in every trade, stay out.

Always remember your main job is to protect your capital and staying in the game.

One thought on “When Should a Trader avoid trading ?

Leave a Reply