What To Do When The Market Gets Sick

Choppy week for the market, choppy week for my health. I missed a day in an already shortened trading week due to being under the weather, but February’s green streak is still alive and kicking at 13 days and $80k strong.

Even though my hot streak has at times been (literally) feverish this month, the market has cooled recently and I’m not seeing the same home run opportunities for $10k trades that I was at the start of February. While I still hope to make this a no-red Feb, my ambition of making it a $100k month is seeming more remote with just five more trading days and a body not quite running at 100 percent.

Appropriately, I want to make this week’s theme about sickness. Everything is susceptible to some kind of harmful influence from within, whether it’s your body or the market. Generally, the best thing to do is take it easy, don’t overexert yourself and give it time to pass (of course, consult to your doctor if you’re truly feel ill).

In the case of the market, let’s take the kind of abrupt cooldown I’ve seen this past week as its sickness. When this kind of underperformance hits traders, it’s easy to get frustrated and make dumb mistakes in order to outtrade the reality of the market. This can mean hopping into non-ideal setups and hoping for the best or, my own biggest shortcoming, trying to trade too aggressively.

This happened to me briefly on Tuesday in Arts-Way Manufacturing Co. Inc. ARTW. I started by making a solid $1,800 trade in ARTW early in the day, only to give it all back in a second trade that put me $300 in the red. Luckily, I was able to climb back into the green, but I ended the day at about $1,300.

Attempting to regain lost returns is not a good position to be in for a variety of reasons, but I recognized that in the moment. While I did keep trading after the loss, I was ready to pack it in if I ended up digging myself deeper into the red.

The next day, I wasn’t feeling well and I did take a day for myself.

I returned to the market on Thursday a little cautious, aware that neither I nor the market were performing at our peak. I took a few medium-sized positions (and one ill-advised large position) and ended the day up $2,600, an extremely solid day.

I’ve hit on this idea before, of recognizing when your trading strategy and the market are out-of-alignment. While you can change up your strategy a little to suit the new conditions, if there’s nothing fundamentally wrong with your overall approach to trading, you might just have to wait until the market is back to normal. If your strategy doesn’t get back to performing, then it might be time to visit a clinic.

The takeaway is that if either you or the market aren’t really feeling up to snuff, simply walk away and don’t trade. Taking a “sick day” is always more beneficial in the long run than risking your health or that of your trading account.