Trading Rut

Dictionary Says

Definition of 'Trading Rut'

A period of investing during which a trader fails to earn profits and instead experiences a string of losses. In the long run, it is common for investors to fall into occasional trading ruts. An investor who can identify the cause of his or her trading rut may be able to get out of the rut by returning to his or her original trading strategy, or by developing a new strategy that takes a change in market conditions into account.

Investopedia Says

Investopedia explains 'Trading Rut'

Trading ruts have a number of possible causes. A shift in market trends or volatility can turn a winning trading strategy into a losing one. An investor may let emotions take over and fail to adhere to his or her original trading plan, or they may never have developed a plan in the first place. It can also be difficult to identify trends in the short term, and choosing the wrong entry and exit points can generate losses. Excessive trading can create a rut if commissions and fees eat too far into profits, and excessive risk taking can lead to larger than anticipated losses.

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