Strategic Flexibility is a Key to Trading Success

Your strategy has to be flexible enough to change when the environment changes. The mistake most people make is they keep the same strategy all the time. They say, “Damn, the market didn’t behave the way I thought it would.” Why should it? Life and the markets just don’twork that way.-Mark Weinstein

With the third quarter in the rear view mirror, I am keeping this quote on a post it that is stuck smack dab in the middle of my desk. What worked last quarter might now work this quarter. Keep an eye on sector action and note what new sectors are breaking out. Are extended groups like commodities and China stalling or continuing to run? What are the big whigs buying? What’s being accumulated?

This past quarter, I ditched my normal breakout-pullback strategy and took a ride on some of the momentum stocks. This might not work in the fourt quarter. I’ll keep my bag of trading tricks near by in case the market dictates a need for change. As I told a reader last month who was befuddled that I was ditching my pullback strategy:

I don’t have *a* strategy. I have many strategies in my arsenal, and employ them as market conditions dictate. I do not have one rigid form. Rather, I strive to be like water. As Bruce Lee would say, water is formless. It adapts to it’s surroundings. Be like water.

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