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Trading Psychology Posted by Team Topstep April 29, 2021

5 Ways To Respond To Traders Block

Brick Wall

By: FairValueTrader

If you are like me, you approach every new day with optimism and open doors for opportunities. I enjoy preparing for my trading day early in the morning, completing my routine with enough time to relax for a few minutes before the financial markets open. The premise behind my routine is that the more prepared I am, the greater the likelihood of success. 

However, there are many times, sometimes more or less frequently, that my desired markets open and I wait for a signal, but no quality trade setups materialize. Eventually, my fingers grow tired of being idle on the computer mouse, and I hope for the chance to pull the trigger on a trade.

If you have traded for any length of time, then you know how this experience feels. As a writer, when fresh material is not quickly coming to mind, we call this “writer’s block.” And so, I have applied an adapted expression to trading, using “traders block” to describe the circumstances of the previous paragraph. 

Let The Trades Come To You

Traders know that this can be a frustrating experience. These moments of traders block are incredibly formative in our careers while also being indicative of our long-term success potential. 

Some vocations may allow the professional to forge their way through certain obstacles. However, the mechanics of trading operate uniquely. I know one trader who assessed the best book they had ever read that helped them with trading was by the baseball legend Ted Williams entitled The Art of Hitting

Williams was a premier hitter for any baseball era, winning many batting titles and being the last hitter to bat a .400 average. Williams recorded how pertinent it was for an excellent hitter to be patient and let the right pitch come to them. The moral of this lesson is that when you become desperate and chase pitches, you lose discipline and strike out. 

I once heard someone assess the batting style of another great hitter of the Boston Red Sox named Wade Boggs. Sports analysts stated that Boggs would often take the first two pitches for strikes and then begin to play cat and mouse with the pitcher, fouling off pitches, waiting for his ideal pitch. While Boggs hit very few home runs, he had an exceptionally high batting average during his career. In short, he was patient.

Don’t Force The Issue

The worst thing a trader can do when suffering from traders block is to force a trade. I often share the experiences of other traders that I have encountered in the last seventeen years, but today I will share one that is more personal. 

I once employed a strategy that worked 70% of the time. The only drawback in my mind was that the signals were minimal during a trading day, perhaps only signaling two or three times. However, the system required monitoring all day. 

When I followed the rules, I made money each week in the most stress-free of ways. As I encountered it, the problem was that I would grow tired of watching charts all day with seldom pulling the trigger. Eventually, traders block would set in when I questioned if the system would even produce any trades for the day. 

Out of impatience, I began to take trades of lower integrity and only fulfill a part of the system requirements. What made matters worse was that on slow days, this system might not signal altogether. My insistence on taking pitches that were not in my high probability zone took a consistent strategy and gave less than average results. 

I learned a few lessons about traders block that I will pass along to you today.

5 Ways To Respond To Traders Block

  1. Pay Attention To What The Market Is Telling You

If your system is not signaling or are more of a manual trader and are not identifying any setups you like, don’t consider what is wrong with your style. Instead, try to listen to what your market is telling you. Often, traders block results from a market that is not tradeable under the conditions of our strategy. The market that we might see as an enemy gives us a friendly message to stay away because the water is too cold!

  1. Control Your Casino Habits

The problem that often arises with traders is the casino mentality. Profit or even the thrill of risk can become something akin to a habit. When we feel anxious because no trades have presented themselves, then identifying our emotions can assist us in working on some traits that are essential both to trading and life success outside of trading. 

  1. Become A Multitasker

The immediate solution that I have found to counter trader’s block is multitasking. For example, as I await signals on one screen, I am writing this article on another screen. Now, I need to qualify for this. My system is uncomplicated and doesn’t require an extreme amount of interpretation. Furthermore, I have used it for a decade and know it very well. 

Lastly, I am typically only employing the strategy on one or two markets. Therefore, I can keep an eye on the markets and find other valuable things to do. I have worked on a Ph.D. dissertation over the last twelve months while trading. For me, it works. The time flies by, enabling me not to grow impatient. I realize this may not apply to everyone. 

  1. Broaden Your Horizons.

Another possible way to counter traders block is to trade a single market and develop multiple strategies on that instrument to become less dependent on one signal. As an alternative, you might apply your successful strategy to multiple markets enabling you to increase your profit potential. However, one must be careful not to go from having too few signals to too many. 

  1. Keep Perspective

Remember that while traders block can be frustrating, feeling unproductive and unprofitable, it is much better than losing day. I used to hear some old traders state, “a scratch is a win,” and while that’s an overgeneralization, there are very truthful elements contained within that statement. 

I recall one of the most memorable volatile days in history when I had friends lose money who were otherwise exceptionally profitable. Meanwhile, my system didn’t generate any trades whatsoever. The disappointment of being idle became much less severe when I realized that having no trades was a preferred alternative to the wrong trades at the wrong time. 

Keep Getting Better

In conclusion, our trading journey is much like life. We are trying to better ourselves along the way and grow into individuals who can sustain the good times and the bad. Next time you find yourself with traders block, remember, there are multiple ways to respond without violating your rule-based integrity.