The old line from Kenny Rogers' 'The Gambler' fits: 'You gotta know when to hold 'em, know when to fold 'em, know when to walk away, and know when to run'.
Each day we wake up as traders and investors looking for a way to make a buck. We use the normal tactics of buy/sell in markets that often have decent depth and breadth, providing good liquidity. But there are times when those conditions change, even for a short while. Recently that depth of price has virtually disappeared, and no surprise we have seen some erratic price movements. This happens when supply is short and demand is fickle and creates an illiquid environment.
The challenge is in price discovery, or lack thereof. This lack of liquidity really sets up a chamber of pain for bulls and bears alike. How so? As we have seen this month, unexpected gaps up and down, surprise tweets and negative trade talk really pump up the volatility. Stop losses are taken out on the upside and the downside. Unless you're extremely lucky, you're getting tossed around like clothes in a dryer.
If you've been feeling this way, then you're not alone. The entire market has changed its profile for now, and designed to deliver some pain. What to do? Recognize you don't have an edge (truly, most don't at this time) and simply step away from the trade. It's one of the hardest things to do, because when we stop trading it feels as if we have stopped working, or simply failed.
That is clearly not the case, but the perception seems real. In my experience, when I can see I have no edge in my trading I have stepped aside to wait for conditions to improve. In the beginning, it was the constant grind and push that would get me in the most trouble. When I realized it was unnecessary to fight a fight that I was bound to lose, it was an easier decision.
Bottom line, be aware when the conditions are not favorable to trade. It's not all too often, and the conditions are not permanent. However, preserve your cash, preserve your sanity and wait for a better day. Improve yourself during these times, and when the conditions improve so will your results.