Sometimes the best trade is no trade. Some traders trade just to trade, which often means emotions get the best of them. There are huge benefits for “sitting on your hands” if you have the right techniques, tools, and strategies together with the discipline to follow your plan.
Often times, the best trade is not taking one at all. Rather
than expose yourself to risk, let the trades go while you formulate your plan
and your trading goals.
Set and forget trading
The “sitting on your hands” strategy is best mixed with a “set and forget”
approach. The set and forget approach is made up of a very short process: place
trade, set stop losses, take profits, and then let the market do the rest. The
sitting on your hands strategy and set and forget trading reduces the amount of
influence your emotions have on your returns and protects your trading account
from irrational decisions. Following a trading plan is made far easier by the
sitting on your hands strategy.
Don’t micromanage each trade
It is very easy to micromanage each and every trade you take, rerunning your
technical analysis studies, checking your custom indicators, and then deciding
the trade was wrong to take. How often do novice traders skew a trade because
they are too quick to modify and even cancel trades long before they are
allowed to let run? Not to mention, buying and selling quickly racks up
commissions and spread fees, which cost the trader even more. Proven strategies
will prove themselves out in the long term without continuous intervention and
disruption.
How to begin sitting on your hands
The first step to any trading
plan is trading goals. Do you want to produce profits around the clock, or
are you looking for a more modest trading outlook? Identify what you will use
to analyze the markets, whether it is technical analysis from your own custom
indicators, or chart and candlestick patterns to the basic trading
fundamentals. Know exactly what you want before you begin to prevent a costly
change of plans down the road. Quality trades should be the number one goal, as
once you place the trade, the strategy demands you leave it up to the market to
work it out.
How to generate profits
The sitting on your hands strategy relies more on the market than the
intervention of the trader. Advanced trading techniques, tools, and strategies
are used simply to place trades, rather than modify them. The trading goal of
the strategy is to produce profits with as little intervention and time as
possible. It can be said that many traders lose money due to an inability to
leave trades alone than to make quality trades. The extra time from trading can
be spent on a variety of things, such as a trading education and resource
program, a live
trading room, or an interactive online classroom. There is much to like
with a set and forget strategy.
Leroy Rushing is an active, professional day trader; trading coach; and author. He is the Founder and CEO of Trading EveryDay, a provider of educational trading products and services that are available worldwide. Trading EveryDay has complimentary/FREE products, a Tools of the Trade eBook and a Trading Room Report, that are downloadable for your convenience.
