Even though this has been one of the best years I have seen in a long time for making money in the stock market with such great trends in both directions, there are times and markets that are best to be out of. With the headline risk and volatility caused by Europe I have been trading smaller and smaller and less and less until finally I am not even in a position today for the first time all year. One of the keys to me holding on to the six figure profits I have accumulated over the past decade is by knowing what trades not to take and when to just be in cash and wait of an opportunity or break out in price. The position of cash is one of the most crucial positions to know when to take with your account to avoid unnecessary draw downs. Especially in a retirement account that you do not actively trade. When you do not know what to do, go to cash until you do.

Here are things for a trader to do instead of trading in unfavorable market conditions:

  1. Relax and take a rare break during the trading day, maybe just check in to the markets every hour to see if anything has changed or maybe even wait to the end of day.
  2. Review your trading plan and add any rules that you learned this year from mistakes.
  3. Read a classic trading book to keep yourself on track like How to make money in stocks or How I made $2,00,000 in the stock market.
  4. Read through the tweets of your favorite traders on twitter that you usually do not have time to do.
  5. Go see a money and unwind, take a complete break and get your mind off the markets.
  6. Connect with a trading friend over lunch or on the phone. Stick with the principles that have worked for you this year not opinions or rumors.
  7. Look through the book reviews of your favorite trading books on Amazon their are a lot of great insights in these reviews.
  8. Visit you tube and watch the videos from Investor’s Business Daily or your Michael Covel a lot of great free material there.
  9. Go back over the charts for your current watch list and search for new stocks that can be added to your watch list.
  10. Work on your own trading psychology: work on yourself so you can trade with more emotional discipline when opportunities arise.  Books by Mark Douglas are great for this.

But whatever you do do not take trades if they do not meet your entry requirements, do not force trades, do not be a trend trader in a range bound market or an investor in a bear market. take your shots carefully. Start small and work your up position sizes as the market becomes more trader friendly and less chaotic.