Boredom trades are one of the biggest issues for struggling day traders. You want to get paid for the time you commit to trading. But unfortunately making money every day is the wrong expectation for new traders, especially day traders, who tend to be the most trigger-happy.
In order to trade for a living, you must recognize the causes of boredom trades, and have strategies for preventing them. They are completely unnecessary trades and are a huge waste of your mental and physical capital. Here are 5 ways to combat destructive boredom trading.
1. No New Positions Past 11 am
The momentum in the stock market becomes much choppier past 11 am. How many times have you had a green first hour and then you keep trading all day and slowly give back all your profits? In trading, you are not paid any sort of set wage. You are more likely to make more money in 5 minutes trading your A+ setups than trading low-quality setups for 5 hours.
Don’t go to the computer thinking “I am going to trade because I want to make money today.” Instead go with the mindset “I am going to the computer to see if there is anything to make money from, and capitalize on opportunities if my setups present themselves”.
2. Leave Your Computer When Nothing Is There
Having the market in front of you makes it extremely tempting to trade. If boredom trades are a big problem for your PNL, a great way to reduce this temptation is to leave the computer. If it is 11 am and you have no positions on, go do something else. Life is too short to sit in front of a computer when there is no high probability trades to take. Get some exercise, go for a walk, or study your old trades to improve your edge.
3. Study Your Old Trades Instead
This is one of the most constructive ways you can keep yourself away from boredom trades. You can still improve yourself as a trader without actually trading. When there is nothing to trade, go back and look at your most profitable trades. Reminding yourself what the best setups look like will give you the patience to wait for them, and keep you away from making mediocre trades.
You need to focus on the process that leads you to successful trading for you. Look at the best trades that you followed your process AND you made money. Remember that making money on a trade does not make it a good trade. Studying your winning trades will allow you to refine your process so that these trades can reoccur consistently.
4. Write Out Your Trading Plan
Writing out your trading plan will help keep you away from boredom trading. When you force yourself to write out your trading plan before you push the button, it will make you realize when you are about to make a low-quality trade. When you write something out, it forces you to rationalize your intended behavior.
Boredom trading will often result from impulsive and emotional decision making. Forcing yourself to write out your plan will make it obvious when you are just placing trades because you want to be doing something. The reality is that successful trading over the course of months and years is the result of sitting on your hands when there is no opportunity out there.
5. A Trader Is Only As Good As Their Next Trade
You should put this on a sticky note by your trading monitors. This will be a constant reminder that you can only settle for the best trading setups. Boredom trading is the reason most traders (especially day traders) cannot do this for a living.
If you constantly remind yourself that every single trade defines your trading career, you will decrease the chance you will take low-quality setups. No one wants to be a mediocre trader. Therefore, you cannot ever take mediocre trades if you want to be a non-mediocre trader.
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