Adapting To The Current Stock Market

Adapting To The Current Stock Market

Trading Blog


January 8, 2021

If you’ve been day trading for a while, you should have noticed that the market is a living, breathing thing. It consists of millions of trades per day, and it gets affected by the news, be it positive catalysts or black swan events.

To put it mildly, things change all the time. And while it’s close to impossible to predict how things will play out in a year or even in a month (the current pandemic and its effect on the stock market is perfect proof of that), it’s safe to say that we’ll need to adapt and learn as we go. There’s no more standing still. Stability equals stagnation.

Many day trading principles will hold true no matter if the market is calm or volatile. However, your strategies should change depending on how the market and the economy behaves. Learning how to adapt is a monumental skill, and I believe that any day trader who wants to be successful in the long-term needs to master it.

In 2020, I took a two-month break from trading the way I always did and started looking for new ways to generate income on the stock market. 

I used to think that having multiple trades a day was a horrible idea. Moreover, I proved it to myself multiple times. Whenever I traded too many tickers, I did it out of boredom. No wonder it almost always ended in losses.

But then I met someone who regularly traded multiple setups. His name is Scott, and soon he became my mentor. He offered me to see trading tickers from various categories in a totally different light. The plan was not to grasp at straws and trade anything that came along the way. Instead, the focus was on noticing opportunities that I didn’t let myself take advantage of before for the sole reason that they weren’t my main setup.

Next week, I’ll post a big article on how to transition from having one day trading strategy to being able to trade multiple setups, so I don’t want to give away too much here. But as you can already tell, I had a mentor who guided me on that journey (more on that below). Nevertheless, things didn’t happen overnight, and having extensive experience and knowledge of the stock market was the baseline that made it possible. Patience was the key in this transition. If you want to catch the next week’s article on my process, make sure to subscribe to my weekly newsletter, and you’ll get an e-mail when the blog post goes live.

So, long story short, I have successfully transitioned to trading multiple times a day. Now I’m trading short, long, big caps, and small caps. At any given time, I keep an eye on multiple tickers to trade. Now that I have this approach, I end up in the green by the end of most days, and I diversify with ease.

I’ve heard about hitting multiple streams of income from the market before. However, I didn’t really understand that concept. It seemed like it was too easy to fall into the trap of spreading my attention span too thin. I was also afraid of trading out of desperation or boredom, something that I was guilty of just over a year ago. But this time, everything is different.

The main source of change is that I have a mentor who guided me through this transition. Don’t get me wrong; I was a good trader before meeting my mentor. I was consistently profitable, and I knew how to trade and track. After all, I’ve been doing it for over 3 years. Yet, sometimes you just need someone to help you get to a new level.

My main problem was that the setup I was best at didn’t show up too often. That means that there were days and even weeks of me not trading at all. I bet you can imagine how frustrating that was.

My trading was too niche. I had to come up with really high entry standards back when my knowledge of day trading wasn’t as in-depth. But once I learned how to honor my own rules, I finally got to a point where I didn’t have to follow them as strictly anymore.

Having a mentor gave me the confidence I needed to look outside of my comfort zone and attempt trading in a whole new way. I hope you see what I mean: I didn’t need a mentor to show me how to trade. Rather, my mentor showed me what was possible by pushing me to see day trading from a different angle.

He didn’t need to tell me when to enter the trade or which tickers to pick. To this day, we don’t trade exactly the same stocks. And if we happen to track the same ticker, we often have different entry and exit points. Having a mentor doesn’t mean that you need to trade the way they do. Moreover, you don’t have to agree 100% of the time. Instead, it gives you access to a different perspective that you could use to expand your ways. However, it’s up to you to decide if you wish to incorporate new ideas or not. There’s no need to copy and paste anything blindly. 

If you’re at the very beginning of your day trading journey, I suggest that you should hold off from looking for a mentor in that sense. By all means, seek out traders whose vibe you dig and who you can pick up bits and pieces from. But if you’re just starting out, focus on learning the rules and understanding what works and doesn’t work for you. Figure out your strengths and weaknesses. Explore who you are when you trade, what kind of emotional reactions wins and losses evoke in you, and learn how to tame them. Only then can you benefit from working with a mentor.

I’ve said it multiple times before, and I’ll keep saying it over and over again. Copying someone else’s style will get you nowhere. Changing your direction just because someone you watch on Youtube did so won’t give you the same results. And just because I don’t strictly follow the 3:1 reward/risk ratio philosophy anymore, it doesn’t mean that you should abandon it too.

 I’m just evolving, and I’m very happy to experiment with this new way of trading. So far, it’s been great, and I want to make sure that it keeps going the same way. But if, for some reason, it doesn’t work for me anymore, I will happily adapt and change my style again.

And that’s exactly the point of this blog post and the video below: don’t get married to any particular trading style. You are here to be a successful day trader. Strategies, plans, and patterns are the tools to help you become consistently profitable; they are not here to confine you.

You can niche down as much as you want to. In the beginning, it’s a great way to deal with the learning curve. This way, you can focus on one or two things that you’re great at and lean into your strengths in order to find consistency and build up your confidence as a trader. You need some resemblance of stability in order to scale and increase your size and risk. But once you have mastered the basics, you are free to explore and find out what else works for you. But again, more on that next week!

Meanwhile, please check out this update that I posted last week. In that video, I go in-depth on my work with my mentor, Scott, and how he helped me reevaluate my day trading habits.

Adapting To The Current Stock Market


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