"Adaptation is the change in living organisms that allow them to live successfully in an environment. Adaptations enable living organisms to cope with environmental stresses and pressures. Adaptations can be structural, behavioral or physiological. Structural adaptations are special body parts of an organism that help it to survive in its natural habitat (e.g., skin colour, shape, body covering). Behavioral adaptations are special ways a particular organism behaves to survive in its natural habitat (e.g., phototropism). Physiological adaptations are systems present in an organism that allow it to perform certain biochemical reactions (e.g., making venom, secreting slime, homeostasis)." Wikipedia

Uncle Rain (RR) told me I need to adapt my trading to the current market conditions. He thinks I don't listen to him so let's keep this between us.

He told me this as I was on a multiple post rant on the lack of signals for me in crude oil. Ok maybe multiple post doesn't quite cover the extent of the rant. "The Thrill is Gone" does summarize it nicely though.

Anyway where was I, oh yes, adaptation. The question is do you change your trading plan to fit the current market conditions or do you sit on the sidelines and wait for the market to come back to you?


Changing your plan could also be described as curve fitting. Continually looking backward to find parameters that would have worked and then hoping they still work when applied to the hard right edge of the chart.

Sitting around for days and days doing nothing also doesn't sound like intelligence in action. Or does it? The turtles used to play a lot of ping pong according to Curtis Faith. This is trading, trading is not normal, normal behavior doesn't work in this business. We all know that, if it did there would be more success stories.

I am a human. I have taken my human emotional brain and created a machine to trade with. The machine does what I told it to do. I told it this based on hundreds of trades and my experience in those trades.

The plan is the result of that work.

But, the market has changed since then.

The 5 day ATR in crude is pathetic. Since there is less range you should be able to use smaller stops and smaller targets and still maintain the 3:1 RR target.

The problem with that is I based my ATR, EMA, LSMA, ADX criteria on levels where we see rapid price movement. If I accept lower levels we have more sideways price action. In other words I don't believe the smaller stop would work.

Let's go back to that humanness. This is February 4th. January of 2009 was a pretty good month for me. LOL It sounds absurd now that I have written it down.


Four days into the month and you want to change what was 5 days ago a great plan and system.

Oh my.

I think I have my answer.

The best part is the less I trade the more I can come up with annoying posts in the EIT's trading room. I know how much they love that. They can't get enough of my witty banter.

I'm glad we had this talk.

I feel better now.


Anonymous said...

well, let's see here

suggesting to dig a little for a mild trend trade is not quite the same as change your plan

for many years now the secret agent man has said, be prepared for no trend, a mild trend and a strong trend

i didn't think it was that important in the beginning either, but after going through what your going through i grew, after some resistance of course and am still learning

trading just the strong trend works great but as your experience grows you'll realize no need to leave money on the table with the mild trends

i have erred on both sides, in the beginning making too many changes, later on not making enough proper adjustments

your plan will mature with your experience, you will get a better feel of what is too big of a change and when a minor adjustment is needed

adding a trade for a market condition, mild trend, is just being prepared. It's not just a matter of smaller targets and stops those are the same for me, it's the parameters that are slightly different for instance how aggressive an entry will be

i hope as well the strong trends come back more often, but being prepared for mild trends as well doesn't cost any thing and could bring in more profits

hmmm, low risk investment, high return, sounds like something an old banker can't resist

it's better to have it and not need it, than need it and not have it

keep up the good work and don't stop digging


Anonymous said...

Don't forget - you could be a gerontomorph.

Mammals were gerontomorphs when the asteroid hit.

Gerontomorphs are not the best suited to their current environment (hence dominated by the dinosaurs) but their oddness leaves them best able to adapt when conditions change.

Keep the faith my little gerontomorph.

Solfest said...

Wow, where to begin.

Uncle Rain I guess all I can say for crude oil is I have not seen a trade that works outside of the strong trend.

That doesn't mean there isn't one. I just don't see it. I think I may need to expand my quite limited basket of contracts instead. Currently I only watch the DOW and crude oil. I may need to take a look at gold, 10 yr bond, euro, etc.

We shall see.

Anonymous I knew the "oddness" would come in handy some day. There is a very fine line between genius and insanity. Those who can walk right on that line may be considered a little odd. :)