“Not trading is a position” is something you hear a lot once you’ve been around markets long enough.
And it is true. Forcing trades in bad conditions is usually worse than sitting out. But I don’t think the idea is as clean or risk-free as it’s often made out to be.
There’s a real opportunity cost to staying on the sidelines:
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you miss trends that start quietly
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you hesitate because conditions aren’t “perfect”
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you end up waiting for confirmation that only comes after the move
I’ve had phases where I was so focused on avoiding bad trades that I also avoided good ones. Being patient slowly turned into being hesitant.
The tricky part is that both overtrading and undertrading feel justified in the moment.
What helped me was reframing it slightly-
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not trading is a position only if it’s intentional
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staying out because nothing fits your plan is different from staying out because you’re unsure or afraid
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and missing a trade because it didn’t meet your criteria is very different from missing it because you froze
Now, when I’m in cash, I try to know why.
Am I protecting capital or am I avoiding discomfort?
Cash can be a position
But so can small, exploratory trades when conditions are unclear
Still learning where that balance sits