Last Thursday after the close I was reading through our newswire service and saw that their in-house traders posted comments about their trading and saw something that caught my attention. Most of them said that they had traded lightly this week given the current market conditions. Further, I have heard from traders on the street that they have found the current market to be somewhat untradable and/or unreadable. In comparison, I had a descent week and had one of my biggest volume weeks since the volatility seen last September-October.

The difference lies clearly on a very important skill: Grinding. You see, trading is a lot of fun when stocks move cleanly points at a time but how often does this happen? Grinding is all about being able to sit there all day long working hard making nickels, dimes and quarters on every trade. Yes it is not a glamorous thing but it makes a big difference.

Last Thursday I started trading Visa on earnings. The stock was not behaving well at all, I felt there were too many 10-20 cent rips and that would make it hard to consistently make money all day long. I jumped over to WFC as my risk was certainly much lower though there was a chance that it wouldn’t move as much. I knew that with my grinding skills I could make more money in WFC even though it wouldn’t move as much as Visa. It wasn’t fun at all and it certainly was a lot of hard work but I managed to piece together, nickel by nickel, a big day.

Do understand that you can only grind in a stock that really is In-Play. If you try to do it on a stock that is not, your win ratio will be way too low (20-30%) and you will lose too many times to the computer programs. Even on a stock In-Play you will lose many times to the computer programs. And this is the most frustrating part about it but you just have to be able to stick with it calmly. You certainly can’t let the frustration take over your trading and make you trade with enormous size. Most of these grind trades are not high probability trades, they most likely are in the 40-50% range. But since most of these trades easily have 1:5 risk:reward profiles then making tens of these trades allow you to put together a decent day.

You see, even if a stock is In-Play most likely it won’t go straight up or down. Many times the stock needs to be accumulated before it makes its big move for the day. The accumulation doesn’t have to take place on a tight range either. But this accumulation offers great opportunity for those with grinding skills. Many often give up after they get screwed a few times by computer programs. Most choose to move on and determine that the stock is too hard and that there is no money in it. Many would never trade the stock again. But the reality is that all of those grind trades should help you get a better feel for when the stock is ready to make its move. It should give you more confidence for holding a bigger position for when the stock starts to go. So all in all is just a win-win situation.

Learning to grind it out is a very important skill to develop. It will add consistency to your numbers at the end of the month. It will allow you to trade under any market conditions and not be completely dependent on a crazy market to make good money. Think about developing this important skill and what you need to do to make this happen. Enjoy the rest of your weekend.