Seasons of Trading

“To everything there is a season, and a time to every purpose under the heaven: A time to be born, and a time to die; a time to plant, and a time to pluck up that which is planted; A time to kill, and a time to heal; a time to break down, and a time to build up; A time to weep, and a time to laugh; a time to mourn, and a time to dance.” Ecclesiastes

Certainly to everything there is a season—even in trading, and especially in trading. We dare not trade against the seasons, and if we observe the seasons, and trade accordingly, our success is more assured.

I like the metaphor of seasonal trading. It feels more natural than bull or bear or correction or consolidation.

Spring is the time for new beginnings, the time for planting, and perhaps also planning.

Summer is the time for allowing things to grow, watering the crop, and enjoying the lushness and the long days.

Fall is the time for harvesting, and doing what we can do to preserve or sell the harvest.

Winter is the time to wait while the land lies fallow and frozen. This may also be a time to research and to plan for the coming of spring.

You cannot plant in winter. You’ll simply lose your seed, and besides the ground is too solid to easily dig in the seeds. If you plant too late in summer, your crop will never mature.

If you don’t harvest in fall, the crop will spoil. If you harvest too soon in summer, the crop will not have matured.

Without paying attention to the current climate, as we invest or trade, we can be entering trades too soon or too late. We can be exiting trades too early or after the move is over. We can be going short when we should be going long, or vice versa. We can be selecting the wrong vehicle for our trading.

The seasons in trading can be as short or as long as a few minutes or a few months or even years. Our time frame has a lot to do with our seasonal reference. Yesterday’s season is not necessarily today’s.

The metaphors we use for trading really matter because they translate in our minds as reality, and we act as if they were actual and not merely a figure of speech. If we use a metaphor of surfing, we look for waves in price action. If we think of gardening, we think of planting, nurturing, and harvesting our trades. If we think of warfare, we think of killing or being slaughtered, conquering or being enslaved; and we may well cower and hide, or become overly and improperly aggressive.

Different metaphors work differently for the diverse personalities of traders. Let me suggest you try out the metaphor of seasonal trading, and see how it works for you. To everything there is a season…