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I haven't traded this week. I placed two trades last week and closed them out quickly, one for a modest winner; the other for a modest loser. So this will possibly make two weeks where, basically, I haven't swung the bat and haven't made any money trading.

I'm fine with that. And therein lies a lesson.

When I began trading late in 1977, I made a conscious decision: I would pursue the markets, but not for my primary livelihood. My market activity would always be to supplement my income, not constitute my income.

Because of that decision, I've always had savings separate from my trading capital, and I've had investments separate from my trading capital.

And that gives me an important option: the option to stop trading.

My trading is mostly in the S&P 500 Index. Over the last twenty trading sessions, the median daily high-low range in SPY has been 1%. That is down 50% since June. Daily trading volume is down by a comparable percentage.

Here are the daily closing prices for SPY over the last 20 sessions: 111.11, 111.14, 111.14, 110.02, 109.41, 111.00, 110.80, 111.27, 109.44, 109.55, 111.25, 111.36, 110.81, 111.11, 110.93, 109.82, 109.81, 110.71, 111.05, 111.78. That's a little bit more than a 2 point range.

If I'm sitting at the poker table and keep drawing poor hands--a couple of low cards, unsuited--will I be placing big bets? No. I'll muck hand after hand. Eventually I'll draw cards worth playing.

If I'm a good baseball hitter and a pitcher is pitching around me, will I start swinging hard at pitches outside the strike zone? No, I'll stand there and wait for my pitch. Eventually I'll get balls worth swinging at, whether it's during this at-bat or a later one.

And eventually I'll get market moves worth trading for my style of trading.

But one key to longevity in markets is being able to stand aside when markets aren't giving you good pitches. It's the capital I don't have at risk in markets that allows me to keep my trading capital out of unnecessary risk.

To have a passion for trading--but not a need to trade: that's a great place to be if you're going to last in the markets.

Source: In a Slow Market, Standing Aside