There is one thing that does not get mentioned at all when it comes to trading, and that is adaptability. One or two guys are constantly talking about it now, specifically Dr. Steenbarger. Most trading books tell you to stick to one strategy that a disciplined trader knows his set-up and sticks to it, and when the market is not favoring his set up, then he’ll sit out. Whatever.
I believe in changes and adaptability, the market changes; it has different cycles where different set ups work. In a bull market, you can buy breakouts; a range market typically mean reversion works better, etc. I’ve played basketball almost all my life, and my game has changed due to my age, I can no longer do the things I was able to do when I was younger. But, even when I was younger playing in the boroughs of New York, I knew what my bread and butter was, spot up jump shooter, but I learned how to put the ball on the floor, how to post up a smaller guy, how to go right, how to go left, I gave myself different options for when the defense finally figured out that I was a good shooter. I feel the same when it comes to trading, you have to start with one set-up and master it, but then you have to find a couple of different set-ups for different market environments.
That brings me to Kyle Korver and Stephen Curry. Korver is a three-point specialist; he formerly held the NBA record for most consecutive games with a made three-pointer, Curry just broke that record. In the trading world, Korver would be considered a “disciplined trader” who knows what he is good at and sticks to it no matter what. Stephen Curry at one time was also considered a three-point specialist, however, over the last couple of years, Stephen started to work on other parts of his game. He became an exceptional ball handler, when they run him off the 3-point line he can now put the ball on the floor and drive to the basket, he can create his own shot, he diversified his game. You take away the 3-point shot and Korver becomes practically useless while Curry would still be incredibly effective.
I believe that the key to trading is knowing what environment you are in, adapting to that environment, and not becoming a one trick pony.