Absolute Top

5 Tips for traders

As trend traders there are times when there is very little to trade in the markets. Even if we trade multiple markets there can still be periods when good clean trends elude us.

That means we sometimes have to stand aside – which can be easier said than done. Here are my top five tips for how to get through a trading slump.

Go on holiday
vacation

This is a great way to revive your trading. You don’t have to go on a holiday of a lifetime – just a few days away to break the boredom cycle should refresh you enough to allow a return to your trading. Even a fairly luxurious short break shouldn’t cost more than a few thousand and I have known of traders lose far more money trying to trade bad market conditions .

There are plenty of other activities you can pursue to take some respite. Take advantage of the break and go enjoy yourself.

Back to basicsGet back to basics

When we’re chasing trades we often throw our sensibilities out of the window. By taking some time out to go back to basics we remind ourselves of the foundations of trading.

As we trade primarily based on technical analysis, much of our focus is on support and resistance. So often, when trying desperately to find a trade in a sideways market, we selectively ignore the founding principles.

Support and resistance are the building block of technical analysis – be they horizontal or otherwise. We need to be reminded of this from time to time.

ReviewReview your trading

If you find yourself chasing the trades then stop and review your trading log. This can be quite a lengthy exercise with two objectives.

Firstly, it will keep you out of trouble. If you’re reviewing your trades – looking at what works, what doesn’t, and why – you won’t have much time to take out new ill-conceived positions.

And second, you will eventually come to the conclusion that your well thought out trades (in a trending market) make you a lot more money than your poorly composed ones in a substandard market.

Revise

Don’t rule out the possibility that you may need to make some revisions to to your trading plan. How can you stop yourself over-trading in non-trending markets in the future?Revisio

Don’t be too hard on yourself – at the end of a trend the markets will obviously reverse and some losses are bound to be incurred. But at the same time be honest and see if there isn’t something you could do differently in the future to help minimize that cost.

Follow the money

Technically, if you can find another market to trade then the markets aren’t in a slump. But it’s surprising how many traders like to stick to just stocks or just forex or, worse still, one currency pair.

A good trend trading strategy should work on any trending market so there’s no need to stick to just one.

Follow the money

Commodities are now more accessible to trade with smaller accounts, too. So don’t get stuck in just one market – keep your options open.

And finally…

You don’t have to be actively trading to be active in the markets. Standing aside is sometimes the best position to be in – although it is sometimes unusual for longer term trend traders to have no positions open at all. So although new positions may be difficult to find (or even non-existent), you should nonetheless have a few trades still in play. This helps keep you motivated to continue your daily analysis despite the lack of new opportunities.

Of all the tips I have given here, I thoroughly recommend the first – to take time off.

In fact, it was on vacation some years ago that I learnt the value of having my money work for me. Without constant interference my few small trades transformed into quite sizable positions with very little participation on my part.

Good trend trading…

Anne Chapman

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