Since I started trading full-time in 2008, I’ve made every mistake in the book. You name it, I’ve done it. In most cases, I’ve done it multiple times. One of the biggest mistakes I used to make was trading out of sheer boredom. Of course, I didn’t know that’s what I was doing at the time. Like anything I’ve learned, I know this NOW and in hindsight it all seems kind of silly. I spent a lot of money learning this.
One of THE hardest things for me to come to terms with on my path to consistent profits was dealing with the sheer amount of time there was absolutely NOTHING going on in the market. I think many are surprised how truly boring Day Trading can be during certain market conditions. For far too long, I felt like I was doing something wrong when I was just sitting there staring at my screens. I’m supposed to be trading right? That means pushing buttons and doing something right?
So, what would I do back then? Rather than sitting on my hands, I would find “something” to buy. Anything really. This little flag on random stock $XYZ looks great I used to convince myself. Guess what? That something or little flag break was usually a really bad idea. In fact, when I started digging into these trades I quickly found that about 90% of them were bad ideas. The other 10%? Pure luck. Just some random dart throw that rarely paid for all of the other boredom trades.
What I finally realized and later engrained in my brain, is that most professional traders spend more time doing NOTHING than actually trading. One should only trade when they see an A+ Setup. You should never have to squint to see those setups either.
Where a lot of people get this “do nothing until you see an A+ Setup” thing wrong is they start to do other things that aren’t Day Trading related. Watch TV in the office. Doing a little shopping online. Check out social media, etc. This is NOT what you should be doing! Just because you shouldn’t be pushing the buy button doesn’t mean you should slack off. Not at all.
Day Trading is a business and you need to treat it like one. If you had a real job would your boss let you read Facebook for an hour and/or shop on Amazon? Of course not! So why in the heck would you allow yourself to do that during market hours?
So, what should you do when you can’t find a trade? Focus on trading without trading. Read a trading book. Read a trading blog. Watch a trading webinar. Fill out your trade journal/tracker. Anything trading related. Just stay focused on your job.
Want to know what I did for almost 6 months straight years ago?
I taught myself how to read the tape. That’s right, I would watch Level2 (along with Time & Sales of course) for hours. Every day. I would find some crazy stock moving that I wasn’t comfortable trading, but I would still watch it. Study level2 and how the prices move. Watch the buyers and sellers – real, fake and/or hidden. Then I would watch another and another and another… Day in and day out for months.
I was convinced that a big part of my edge in Day Trading was going to come from being able to read L2. I just needed to figure it out! So, I dove in…
Guess what? I was right. One of THE biggest ah-ha moments I had was when I finally understood the price action on the tape. When I was finally able to make an educated decision on where a stock might go based on the price action I was seeing, that’s when my trading really took off. It wasn’t just about the chart anymore – it was about the chart AND the price action on the tape.
On a side note, this is why we spend about 3 ½ hours teaching Level2 during our course. I show everything I’ve learned over the years in order to shorten the learning curve for others.
Back to boredom.
A BIG part of learning to Day Trade is teaching yourself that it’s OK to do nothing. NEVER trade because you’re bored.
By the way, the idea for this blog came to me the other day in chat. We absolutely nailed a trade in $SEDG. Here’s a screen shot of what we were looking at and note the time of day (2:33ish). And speaking of boredom, I almost feel asleep watching and waiting for this thing to trigger:
I made the comment that $SEDG was the only trade I took since 10:14am. Many in chat were surprised by this. Surprised that I had been sitting at my desk for over 4 hours (sans some Frisbee throws for the Weims and a quick sandwich). A member sent me a private message and said he had taken 5 trades during that timeframe. I asked how many of those trades worked. He said one. I asked if that one had paid for the other 4? The answer was a resounding NO! and the trader was very RED on the day even though he had started the day off well. I asked why he took those trades – were they A+ Setups that just didn’t work? The reply: honestly Wayne, I think I was just bored and even let other traders talk me into crap.
There are other lessons in that example about how “time of day matters” and you shouldn't succumb to peer pressure when trading, but I’m not going to go into those topics today.
I will add this: This boredom trading issue we ALL deal with is even more difficult coming out of a “fishing with dynamite” type of market. In my opinion around January 17 (week 1 of earnings season the way I track it), the markets changed. We went from fishing with dynamite to did someone hit pause button on the markets? Then we had the crazy “$XIV we all love to short volatility blow up” when NO ONE knew what in the hell was going on let alone what to trade. Just #BTFD.
This all goes back to quickly adapting when the markets change. Those who quickly adapted and became comfortable with trading LESS and even doing nothing for extended periods of time are slowly grinding their accounts higher. Those who didn’t adapt? You can see their money in this graphic:
Let’s summarize! Please don’t trade out of boredom! It’s more than OK to do nothing. You’re still doing your job! When the market tells you to do nothing, then do nothing. Please don’t squander the time though. Study and stay engaged. Be the orange person.
Questions? Comments? Reach out and/or leave a comment below.