What do you do to keep your mind sharp and your plan on track when the markets are trading slow(volume)? For example this past Friday, mainly the afternoon seemed to be slow, I lost focus and made some undisciplined trades and lost because of it.
I don't enter positions during slow, stagnant and choppy periods. I'll either continue to watch the markets or turn the computer off. This past Friday afternoon, market was sideways slightly negative until 1PM Eastern when Goldman Sachs made very negative comments about motherboard sales in Asia, and the whole market dropped for rest of the afternoon. Good shorting opportunities in tech stocks for rest of the afternoon.
I guess if you can't find good opportunities, stay out of the market! Like you pointed out, there are always good opportunities out there, it's just a matter of finding them. I would assume experience helps for knowing when to sit out a few hours or a day.
Make it a habit to trade more aggressively during the first and last few hours of the session. That's where the bulk of the day's volume is. If you're patient, try to look for reversal trades at mid-session if the market is making new highs or lows on the day. You can then get a good steak dinner instead of franks & beans with the money you make from that trade. Try it out!
i have a list of trade setups. but even if i see one of these setups presenting themself during the doldrums (11:30 am to 2:30 pm EST), i will generally not enter the trade, unless there is extra confluence. and i will trade 1/3 size. contrary to common psychology, the money you won in the morning (higher volume time) is not the "market's money" to give back in the choppy doldrums. I will step away from my computer, lift some weights, etc. i also thoroughly went over my trading stats, and found the positive expectancy for most of my setups goes down in low volume periods (with 2 exceptions. these setups do better in low volume chop. go figure), so why trade them? the first rule of trading is protecting capital. you don't need to trade for the sake of trading. if you feel the need for pressing buttons, switch your DOM or whatever trading program you use over to 'simulation mode' during these periods.
A variation on whister's idea. Run two doms, one on sim, the other on cash. Take any trade you feel like on the sim dom and just take the best on the cash dom. For me I find that sim is as involving and thus satisfying as cash so it lets me try out doubtful trades in real time without damaging my account. I keep separate spreadsheets for sim and cash.
excellent post! i basically run contests between my setups. every six months, i go through my setups and delve into what is working best, and what is working worst. assuming sufficient "n", I may have to tweak parameters of a setup to find a better fit. this is how good setups are developed imo. but the sim trader is exactly what i do. i run three computers. one is running on my IB simulated trading account. so, i can play all the 'fake trades' i want on it. needless to say my equity curve is MUCH less smooth on that account. which just reinforces to me the importance of discipline. it is not the "markets money". it's MY money