Successful traders are always students of markets, always learning, and always adapting. They have periods of feast and famine, and they learn to keep themselves afloat during the lean times so that they can participate when things get better. In that context, learning when to not trade is a crucial component of trading success.
One of the most common mistakes traders make is that they address performance problems by thinking harder. Like the insomniac who stays awake longer and longer thinking about trying to get to sleep, the trader who analyzes and worries about performance loses that “zone” in which probability distributions present themselves implicitly.
People make money in markets two ways: by investing and by trading. Investing means generating a big picture view and riding out short term noise en route to seeing that view materialize. Investors are top-down thinkers: they’re analytical and their skill lies in putting pieces of research together to form a picture that others haven’t yet seen. Traders are bottom-up thinkers: they recognize patterns as they form and act on them quickly. Where the investor thinks deeply about opportunity over time, the trader thinks broadly about what’s happening in markets at a given time