Best action? Inaction.
Traders really suffer from conventional education. All along, whether it’s academics, sports, music, or just about anything, the best path to success is to “get out there and do something!” Study after study has shown that there is a direct correlation between activity and achievement, and we’re thoroughly schooled in the “hard work = success” mantra.
Unfortunately in trading, the best course of action is often to do nothing. In fact, it’s usually the best course of action MOST of the time.
That’s right, on most days, there’s really nothing to trade because on most days the market is moving in a trading range. One of my most successful trading strategies has all of about 7 trades…per year.
This crazy market has provided more opportunities than normal — it gets overbought or oversold lately in a matter of days — but I’m betting the last 4 months sees little activity.
It’s hard, of course, to do nothing. It feels like you’re being lazy. But, it’s usually the best way to trade.