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Less is more in trading. Trade less.

Updated: Nov 14, 2023

4th July 2022

I have had it on my list of topics to write about "trading less" for a while. This idea was reinforced for me by two Tweets that I saw from Julian Komar @BlogJulianKomar over the weekend. I've reproduced the two Tweets in the images below. They relate to the idea of trading less and saying "No".

This really resonated with me as I have been trading a lot less recently. I have not been seeing too many setups that meet my criteria to trade (particularly in the past month). I'd like to say that I am totally comfortable with this... it has been the right call for the most part, I think, as my capital has been protected in a very tumultuous time.

Whilst I have been comfortable sitting on my hands for the most part, I will admit that I do suffer from some anxiety about doing nothing when the market is clearly moving around.

Julian Komar Market Update Premium Tweet

This is a conundrum for me that I've had throughout my career. Prior to starting Traders Corner, I was a futures broker. As a broker, you're incentivised to encourage clients to trade OFTEN and as BIG as possible. That's how you generate greater commissions as a broker.

But I also knew that trading LESS was actually the right way to trade, and trading SMALLER was also usually in the clients' best interests. I saw it with our clients. It was usually the clients who traded less often that made the most money (and we, as brokers, didn't make a lot off those clients). The clients who traded most often usually didn't fare well but did succeed in converting much of their cash into brokerage commissions and trading losses. I struggled with this conflict of interest.

Promoting Proper Trading Principles

Tick Box

Eventually, when I decided to leave the corporate world to start Traders Corner, my intention was to Promote Proper Trading Principles, and that remains my north star to this day. Part of "proper trading principles" is to encourage our subscribers to wait for the right setups to trade, to trade less, and to trade with careful risk management and position sizing. We want our subscribers to succeed and to realise that this is a long-term endeavour. It's not a get-rich-quick scheme. Trading properly is a get-rich-slow scheme. Steadily, with compound returns ultimately doing the work over the long term.

Although I am no longer a broker and no longer incentivised by commissions, I do also know that our subscribers want trade ideas. This keeps me on my toes. I have to manage the dance between providing regular trading ideas but also encouraging our subscribers to do the right thing (which sometimes means trading less or not trading at all).

Day Trader vs Swing Trader

Now, I understand that different traders have different styles of trading. Some of you here trade the market intra-day. That's a more active trading style, so naturally, you'll be trading more frequently. Personally, I don't trade intra-day moves much. My style of trading is more "swing trading", where I look to hold trades for a few days to a few weeks at a time. I also have a playbook that dictates the types of setups I look for to initiate a trade. Lately, I have not been seeing many of my setups presenting themselves, so I have not been doing many trades.

This means I have not been making any meaningful money from my trading recently. But it also means my capital has been protected in what has been a really awful two quarters to start 2022. So doing nothing has been advantageous recently.

We are faced with a lot of very conflicting information at the moment. Most of the information is stacked towards the bearish side, but one can also argue that there is a lot of pessimism in the market currently, and it is often when pessimism is at a peak, that the market can stage a counter-trend rally. Will that be the case now? Maybe or maybe not. Personally, I feel that trying to force long trades in this environment is dangerous, but I am conscious of the fact that a bear market rally could suddenly spring to life. So I'm also cautious to be shorting aggressively too.

At the end of it all, I come back to my playbook and ask whether I see any setups that conform to my playbook. If not, then sit out and wait for setups to present. There's no need to force trades just because you feel like you need to be doing something.

Don't trade out of boredom. Don't force trades. Remember that your number 1 priority as a trader is to protect your capital. Right now, in 2022, if you've protected your capital from losses, you've done a lot better than most. The time to make profits will come, but be patient and avoid the urge to force trades just for the sake of trading. This is an environment that is trying hard to separate traders from their money. Be careful. You want to be in a strong position to take advantage of better opportunities when they present themselves. That means being in a strong position in terms of financial capital and mental capital (confidence). There's no shame in doing nothing and sitting on your hands if you're not convinced of anything.

There's a time to go long. A time to go short. And there's a time to go fishing.


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