We've all been there before. When you're in the market, trading often times creates the pressure to act. It's just how it is.Prices move ever so quickly in markets and headlines flash across the screens in an instant. You then see big moves on the charts and people talking all about it everywhere. Even more so in this day and age when everything is amped up by social media, dialing things up from zero to ten in no time and promoting the fear of missing out.It creates an impression that if you are not buying or selling something, you are falling behind.However, it's always important to take a step back or perhaps even to just take a walk. Step away from the screens and just remember, trading is not a competition of who can press buttons the most or who trades the most. At the end of the day, trading in its purest form is deciding when the potential reward is worth the risk when you participate in the market.And sometimes, or perhaps even more often than not, the best trade you can do is to simply do nothing.Pricing matters just as much as the idea executionTake this as an example."Every morning, you buy apples at wholesale for $0.50 each and sell them for $1.00. Easy-peasy. Your margins are predictable and you understand the business well.But all of a sudden, bad weather disrupts the supply to the wholesale and they increase their price to $0.95 per apple instead.Technically, you can still buy them. However, your profit margin has more or less disappeared now.And so the question then is no longer a case of whether apples are a good product to buy, but whether they are a good product to buy at today's price?"In trading, it works very much in the same way.A stock can be a great company but still be a bad trade at the wrong valuation. A currency may have a compelling long-term story but be poorly positioned just before a major central bank decision. Gold may have a bullish structural outlook, but chasing it after a surging rally could leave you high and dry amid a poor risk-reward setup.You don't have to trade every moveNow, let's go back to the above example."The wholesale now tells you that the price of apples are going to rise again tomorrow after already going up to $0.95 per apple. What do you do now?"Just in that sentence alone, there is already a sense of urgency and fear being planted. Should you buy apples before prices go even higher?And this is a good lesson to traders that normally hits after the fact.It's that kind of feeling when the stock you're watching breaks out to a new high and suddenly there's a fear of missing out on the rally. Or when a currency suddenly surges on a headline and traders jump in to pile on the initial move.However, it is once again important to remember that just because something is moving and drawing attention does not mean that it is a good trade."Let's say the prices of apples now go up to $1.50 each. They are now three times what they used to cost before this disruption.In this instance, you buy them because you think that prices are going to keep rising further. But instead, the bad weather only lasted for two days and then prices normalise after back to $0.50."In seeing how that happened, you didn't actually lose money because of your underlying idea on apples was wrong. You were right, buying apples and then selling them after can be profitable. However, you lost money because you were forced into a bad entry position. And that distinction is an important one in trading markets.Never rush into uncertaintyHere's another example."You go to the wholesale today and the price they quote you is $0.95 per apple once more. They then tell you that the forecast tomorrow is that bad weather could strike again.If it does, the prices of apples could surge higher again. If it doesn't, the prices of apples could fall back lower instead. So, what do you do next?"You have pretty much two options. The first, being that you could try to predict the outcome one way or another. Or the second, is that you could wait until tomorrow instead.And this is very much similar to trading around key risk events (for example data releases like NFP, CPI, or even central bank decisions) or things that you may not fully understand, hence making you uncomfortable in making a decision.You may have a strong and assured view about the broader market trend, but one data point can still generate enough volatility for more violent short-term price swings.In this instance, waiting for the information does not mean you lack conviction. It simply means the uncertainty is currently too high relative to the potential reward. And sometimes, being just that little bit late with the benefit of having the information is more valuable than rushing to be early but needing to make a guess due to the uncertainty involved.And if not, just remember that there is always going to be another opportunity in markets.Capital preservation and risk managementAnother part of this is the less sexy and more psychological aspect when it comes trading markets.This is something that you can't quantify and see on the screens and what not. The capital preservation argument in terms of doing nothing pretty much reframes it from something often seen as being "passive" to it being more of a risk management decision."Imagine you catch a windfall and suddenly have $100 to spend on a new product from the wholesale, this time oranges.The oranges look expensive and they are riskier than apples, but then you think that you can afford to spend an extra $100 anyway. The market turns against you and you lose $50 for taking on a new venture you are not exactly familiar with.The following week, prices for apples drop to $0.30 each because of a supply glut. That's an excellent opportunity to step into the market and capitalise. However, now you're only left with $50 to take advantage of that situation."In trading, managing your capital works more or less in the same way. By not trading, it means that you are not making money. But it is also important to realise that by not trading, you are also not losing money.And this becomes even more important when one realises that losses are more often harder to recover from when they first come about.If you are down 10%, you only need roughly just above 11% to get back to breakeven. But if you are down 25%, that suddenly becomes roughly 33%. And when you are down 50%, that recovery figure then becomes 100%.It's important to realise that capital preservation is not simply a defensive concept. It is what allows you to stay in the game to be able to fully take advantage of future opportunities.Remember this. A missed trade does not reduce your account balance.A bad trade does.Why doing nothing is still a decisionEven in doing nothing, it is important to realise that there is a difference between being patient and being paralysed.Doing nothing because you are afraid to make any decision at all is not good trading at the end of the day.But doing nothing because price levels are unattractive, the uncertainty is too high, or the risk-reward does not justify participation is something entirely different. That is just simply deliberate risk management.In the examples above, waiting to buy apples and a more sensible pricing is still part of running a business. And in trading, sitting on cash and waiting to ride out poor conditions is still trading.At the end of the day, we as traders don't get rewarded based on how many trades we make in day, week, month, or year. The reward comes when the trades you choose are good enough to compensate you for the risks you take.That can sometimes mean buying something or selling something else. And sometimes, that can also mean to simply do nothing. This article was written by Justin Low at investinglive.com.