5 Signs You Should Avoid Trading During Slow Markets

Dec 6, 2021

Written by:
John McDowell

We all love to trade. That’s a fact. There’s just something about waking up each day to new opportunities and fresh trades waiting for us. But what happens when the market shifts, and suddenly the momentum has died. That’s a red flag, and it is one of the reasons why most traders should avoid trading during slow markets.

In this post, we’ll discuss a handful of reasons you should avoid trading.

Avoid Trading when the Market Slows

It goes without saying that the majority of stocks follow the general market. There will always be exceptions to the rule, but if the market is in a correction, you can expect 90% or more stocks to be in a correction as well.

This is why it is so important, even for day traders, to be in tune with the general market. Ask yourself questions like:

  • Are we in an uptrend?
  • Is there momentum?
  • Are big operators putting money in or is the action just slow?
  • How many opportunities are showing up each day?

Depending on your answer to some of these questions may determine whether or not you need to take a break with the market. It doesn’t always pay to play. Sometimes, it’s best to take the time the market is giving you to do just that: play!

QQQ in correction
QQQ in correction

These can be great times to spend with family, go on vacation, or find some other quality stimulus to fill your time with.

As our friend, Dr. Brett Steenbarger says:

The bottom line is that most of us should be trading less.  Much less.  Activity born of true passion *gives* us energy.  If you’re finding yourself drained by the work of trading, you are probably shortchanging the rest of your life and jeopardizing your returns with the overtrading that results from lack of focus.

Dr. Brett Steenbarger ph.d.

This is why it is so imperative to step away from the desk at times.

Avoid Trading when the Setup Isn’t There!

Despite what the general market is doing, you may find that your prized strategy hasn’t been working lately.

Now, that doesn’t mean you can’t find some sort of edge in the market, or that you might need to adapt a little. However, we find that when your setup isn’t “showing up,” it’s time to take a step back.

For newer traders, if you even have a setup, you’ll be inclined to “put on a trade” just to “see what happens.”

This isn’t trading. This is gambling, and it is reckless with your money. “Let’s see what happens” isn’t a strategy. It is a sign of boredom.

If the volume doesn’t meet your criteria, the momentum, the price action, etc., then sit on your hands. Get up, walk away. There is no reason to force trades when the setup you know and love isn’t presenting itself.

Take a Break after a Series of Losses

As a general rule of thumb, we like to give ourselves three strikes before we bench ourselves. If you can’t place one winning trade out of three, something is bad wrong.

  1. You’re not in tune with the market
  2. There’s something you’re missing
  3. Emotions are out of touch
  4. Strategy isn’t working
  5. You’re being undisciplined

Whatever the case may be, three strikes is a good reason to go sit on the bench and review the pitches you swung at. Why didn’t the trades work? What did you not see? Was something in the broader sector weak?

Sometimes, the review process is more important than trying to force more trades and revenge your way out of a slump.

When this happens, take a step back and realize that it might not be you. We’re all human, and it takes reflection to gain insight into our trades and why they went wrong. Get back to the sim, analyze your trades, and wait for the dust to settle before you put money to work again.

Avoid Trading when You Aren’t Rested

We’ve spoken about this in our blog titled 7 Physical Habits That Impact Trading Performance. Most people don’t understand that trading is a performance activity, akin to any kind of sport or artistitic work.

To that end, you must be ready to perform. If you didn’t sleep well, exercise, eat well, etc., you may not be on top of your game. There are so many things that go into trading well that we don’t realize.

One of those things is feeding the frontal cortex. When we don’t sleep well, our amygdala steals the blood flow from our frontal cortex, which is recipe for disaster. Responsible for the fight or flight syndrome, the amygdala is not what we want to be using when we need to be calm and logical.

So, consider that if you aren’t rested or physically prepared for trading, it may be best to set some rules for your trades, or avoid trading altogether.

Avoid Trading when You’re Emotional

Aside from physical habits, emotional habits can also wreak havoc on your trading. For this reason, it’s best to avoid trading when you’re angry, tired, bored, or even excited.

Trading well requires an even keel. Too much anger and you’ll try to force trades or revenge trade. Too much apathy and you’ll put on trades for no reason. Too much excitement and you’re liable to overtrade just for the thrill of it.

Take inventory throughout your trading day of your emotions. Make notes of how you feel during trades and rate yourself on a 1-10 scale so that you can keep track of your emotional state. Awareness is always the first step.

Once you get a grip on your emotional issues, learn to take breaks when those markers are being hit.


We hope this short piece helps you the next time you find yourself trading when you really shouldn’t be. Trading is a performance activity and requires a very high level of expertise in more than just technical chart skills. Take some time to compile a list of criteria for yourself. Make rules for when you will step away and avoid trading.


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