The search for the best or ideal method of trading takes up a huge portion of the research time of the trader. Even though it is an important element in trading, there is even one more element which is considered as the most significant one but is not given due importance by many. Knowing when you should not trade is a critical aspect of trading. During a few market conditions, even a great system could break down and only a few strategies of trading will work in every trading environment. Hence, in order to achieve good returns, one should preserve the capital when there is a low-profit probability.
Why not trade is considered critical
All the experienced traders will know when to slow things down and not act when the market is not favorable. If the trading is done during unfavorable situations, then it can cause severe loss and will lead to a situation where things cannot be revived.
In cryptocurrency trading, the auto-robots which are available in the market like bitcoin loophole does not enter into any kind of trading activities when things are going bad. The robot takes a decision to trade only when all the market conditions are favorable to the trader and hence it avoids making losses. Go through the full report here to understand about the software.
Newcomers to the trading industry, with their enthusiasm, conduct trading even when the losses are mounting. They try to make up for the losses instead of stepping back in such situations. This trader often does not stick to the trading plan and take decision-based on hope rather than on solid analysis.
Know your system
Each system performs differently in different kinds of market environment. In a choppy market, few of the trading systems will experience high profitability while few others perform exceptionally well in trending markets. Hence, it is the trader who should understand the system and should be aware of which kind of market, the system will be profitable. For instance, a “scalper” will suffer a loss in the volatile market. He is the one who is looking for small profits.
It is quite imperative that the trader should be able to identify when it is time to trade and when not to. High probability time to trade will be denoting the time wherein the overall market will showing the characteristics that compliment trader’s strategy. And a low probability time is when the market is showing signals that are not fitting with the plan.