When You Should NOT Trade! 11 Reasons to Take a Step Back

by | Jul 11, 2023

You have two choices each day you open your trading platform.

To trade or not to trade.

There are circumstances that will rise where you won’t trade for that day. Then there are times where you should NOT trade at all. And then there are situations where you need to avoid trading.

You know when to trade. Now here are a couple of 11 reasons to take a step back with trading.  

  1. After a bunch of knocks

After you take a couple of losses, it might feel natural to want to jump right back in.

You don’t want to lose.

You want to recoup your losses.

You want to ride the prominent trend.

You have to learn to resist this temptation. Whether you buy or sell, if the market is in a bad state or environment – you’re likely to lose your positions.

So take a step back and come back tomorrow.

  1. The peril of revenge and impulse trading tendencies

I’ve told you many times.

Any occurrence where you are NOT following your proven strategy is deadly.

Revenge and impulse trading (to try and make up for any losses) is a dangerous path.

Not only for the day.

But it scars and sets a precedent for you to do it in the future.

In the medium term, it’s a surefire way to harm your portfolio.

Learn to recognize and control these tendencies.

Rather take a step back and come back, the next day, with a more rational and logical approach.

  1. The absence of clear setups

If you don’t have any high probability trades that have lined up, forget trying to take a trade.

This is like sailing with a destination in mind without a compass.

Trades will come. The markets will always be there for you tomorrow.

So wait them out…

  1. Emotional instability

Emotions when trading are a dangerous trait to have.

Anxiety, excitement, ego, fear, greed or distress can cloud your judgment.

If you’re emotionally unstable, you need to take a step back and learn to control your emotions.

Drop your risk, ‘till you no longer feel a loser or winner.

Continue backtesting until you regain your confidence.

Refrain from trading until you learn to balance your emotions.  

  1. Can’t afford it – forget it!

If the funds you’re using for trading are essential for your survival or well-being, this is a red flag.

You are going to be highly dependent and emotionally attached to your funds.

I say it over and over…

Do not trade with money you can’t afford to lose.

It creates an unhealthy pressure that can influence your trading decisions.

  1. Don’t know it – Don’t trade it.

If you lack a solid understanding of markets, methods or money management – you’re not ready to trade.

You need to understand the above along with the market dynamics, the costs and process of instruments and how your trading and charting platform works.

Education is key here. Learn, learn, learn.

When you have less questions and more answers, then it might be a better time to take the trade.

  1. Low probability setups

When the market is moving nowhere slowly.

Or the markets are moving wildly with high volatility – this might be a time to not trade.

The risk and uncertainty of the market is high.

And this will result in only low probability trade setups lining up.

If you really want to trade them, because you have nothing better to do – fine.

But at least risk LESS.

Risk between 0.5% to 1% of your portfolio instead of the full 2%.

  1. When exhausted, ill or mentally unstable

Physical well-being also plays an important role.

Your mental state affects your trading performance.

If you’re not in the right mindset, consider taking a break.

Avoid trading if you’re not feeling well, exhausted, angry, or you’re feeling unstable.

Get your mind right, recover and see the markets with healthier and happier eyes.

That made sense to me :/

  1. No clear setup

Sometimes, you might analyse the markets.

And you’ll see nothing.

Then, you’ll re-analyse and look EXTRA carefully.

You’ll look and look and look until, somehow a trade presents itself.

I’m telling you now, this is a dangerous time to take the trade.

A trade should stick out like a sore thumb (according to your strategy).

If it doesn’t, then you’re trying to see something that most likely is NOT There.

Trade based on sound, proven and strong analyses, not via imagination and hope.

  1. During major economic announcements

This point is more related and significant to Forex traders.

If you see a high impact economic announcement, report, meeting etc…

It might be a good idea to take a step back, and skip trading for the day.

I’m talking about NFP, Unemployment, GDP, FOMC, Interest and Inflation rates etc…

  1. Without a trading plan

A well-crafted trading plan is your roadmap.

It’s your game-plan to make a probability prediction on a potential outcome.

You need to eat, breath, shower and sleep with your trading strategy.

If you don’t have one, don’t trade until you develop a plan and are ready to stick to it.

Right so, now you now when to take a step back and NOT trade.

I’ll sum them up here for you…

  1. After a bunch of knocks

  2. The peril of revenge and impulse trading tendencies

  3. The absence of clear setups

  4. Emotional instability

  5. Can’t afford it – forget it!

  6. Don’t know it – Don’t trade it.

  7. Low probability setups

  8. When exhausted, ill or mentally unstable

  9. No clear setup

  10. During major economic announcements

  11. Without a trading plan

Trade well, live free.

Timon Rossolimos
Founder, MATI Trader




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Timon Rossolimos

Founder, MATI Trader



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