How To Keep Up With High Performance In Slow Markets?
The markets have been trading slowly, with low volume and volatility.
For many, this is a trigger to all sorts of mistakes, especially overtrading.
In this article, I’ll go over the topic of handling slow market conditions, being fast to adapt, and pinpoint 5 pieces of advice to keep high trading performance.
Adaptation is the goal when market conditions change and everything spins around that.
The trader who is faster to adapt succeeds. The one who enters in denial and keeps on forcing the same performance in the new conditions ends up being removed from the game.
I’ll share with you 5 pieces of advice that will make sure you adapt to slow conditions and keep high trading performance under them.
Let’s get it!
1. Lower Expectations
Slow markets are not going to provide you with the same results as a faster, more volatile market. You need to adjust your expectations accordingly.
It's crucial to let go of your ego and detach from the emotional need to make big profits. Many traders struggle with this, as they have a desire to prove their worth or feel validated by the market. But this kind of thinking can lead to risky trades and mistakes.
Instead, focus on the type of market you are dealing with and what it is capable of providing at the moment. This information will allow you to adjust your strategy accordingly.
Remember that change takes time, and it starts with acceptance. So, if you want to adapt to slow market conditions, start by lowering your expectations. This will create the right environment for you to make the necessary changes and succeed in the long run.
2. Increase confidence
When the market slows down, it's easy to lose confidence in your strategy and your abilities. You might find yourself making mistakes, and feeling frustrated with the lack of volatility. But here's the thing: trying to force yourself to be patient and disciplined it’s worthless as those are just consequences.
Instead of aiming for more patience and discipline, focus on the provider of those: confidence.
Confidence contrasts fear. If your fear is the main character of your mind you’ll decide based on that fear. If, however, you’re able to overpower the confidence above the fear (not trying to remove it as that leads to denial and it’s impossible), you’ll be able to change your decision-making.
What I always try to find with the traders I coach are ways to increase their confidence in two aspects:
Their systems
Their ability to perform
The way to go is recurring to:
Backtest your strategy and collect setups
Review your past winning and losing trades and identify patterns
Analyze your worst trades and identify similar patterns
Reflect on past setbacks and how you overcame them successfully. How did you handle them? What made you overcome them successfully?
Control gives you confidence. By focusing on what you can control - your strategy and performance - you can hear the voice of the market rather than your ego voice and let that read shape the performance of your strategy, without any sort of resistance.
3. Adjust Strategy
Slow market conditions can be tough to navigate, but it doesn't mean you should give up or change your strategy completely. Instead, you need to adapt and adjust to the current market reality.
But let's be real, change is hard. It's normal to resist it and want to stick to what we know. However, if we want to succeed in trading, we need to be willing to adjust.
So, how can we adjust our strategy in slow market conditions? Let's break it down:
Entries: Be picky! Slow markets mean fewer opportunities, so focus on the high-quality setups that have a higher probability of working out. Don't waste your time on B setups. Filter more.
Risk, Position-size: You might want to reduce the amount of risk you’re using as a method to foment confidence. Slow markets require a more conservative approach to preserve your capital. You can always increase risk when the market is more favorable, but for now, take it easy and be conservative.
Trade management: Protect your profits. Consider pushing your stop loss to breakeven earlier than usual or set new rules to trail it as the price moves in your direction. Be more conservative once again.
Exits: Don't be greedy! Partial profits are key, even in slow markets. Take the first partial earlier if necessary, you can always leave a smaller runner for potential bigger profits. Once you fully accept the current market conditions, you’re able to leave your ego aside and play with the reality of the markets, not with your ego reality.
4. Adjust Routine
Adjusting your trading routine is just as important as adjusting your strategy. With fewer opportunities, you want to make sure you don’t fall for boredom or demotivation as these can be a trigger to mistakes.
Many traders have the tendency to increase trading hours in an attempt to compensate for the lack of opportunities available. But once again, this is just a method to try to fulfill their emotional needs. The market doesn’t need to offer you more opportunities. Increasing trading hours is just a coping strategy to mask the real problem - lack of acceptance.
Making use of alerts is key in these conditions. During the time in between alerts, you can work on your confidence, skill framework, and preparation.
Remember, it's not just about trading, it's about becoming a better trader. Don’t confuse both.
5. Take It As an Opportunity
Slow markets might not offer you a lot of opportunities for trades but they are a great opportunity to extend your knowledge.
Take advantage of the downtime to study different markets and trading styles. Maybe you've always been curious about forex or commodities, or maybe you want to try your hand at swing trading instead of day trading. Whatever it is, take the time to research and learn about it.
Some, use the time to take some holidays which is also a great option.
Remember, slow markets are just a temporary phase in the grand scheme of things. Focus on improving your adaptation skills and you’ll be sure to survive.
Final Words
There are times when a trader should be more aggressive, while other times require a more conservative, selective approach to preserve capital. Those who are unable to be patient during these periods won’t get the chance to capitalize when it's time to be bold.
Whenever you’re ready, there are two ways I can help you:
1- Spot and eradicate your worst trading mistakes with my E-Book here
2- Elevate your trading performance with The Peak Performance Trading Program (one-on-one). Fill out the qualification form here.