The more favorable, desirable, or feasible it is becoming to trade in a direction, the more easily the screeners are picking up trade signals and setups. This is a little worrisome because:
- a) The output of screening stocks in directional markets could be basic trend detection, and hence its reliability in non-trending markets could be questioned.
- b) Earlier, in reversal situations (bullish to bearish, bearish to bullish), a late signal could mean sustained development in the move. Now, in ranging markets, an early signal is seen as valuable, and late entries are considered to be more prone to the traps of price reversals (and in fact are).
In such a scenario, a profitable (deemed) setup intrigues one to “relax” entry conditions and benefit early from the trending markets. However, that would be giving in to “relaxed pressure” and would only make room for more relaxations in the future.
One should not aim to oppose the markets by challenging the ongoing trend and seeking reversals (reversal bias) or by going for the weaker, laggard choices. Any attempts at leading the markets before they make major moves would be speculation and should be avoided.
Steps to Ensure Adaptation
Price Action & Money Management
Price action is to be considered king and followed. All money made is money made; the function of mathematics and compounding should be considered without actively trying to increase the multiple of repetition.
Timing of Trade
The timing of the trade is to be prioritized. The timing of a trade itself is independent of any fixed formula but simply accommodates the test and retest of various price points in correlation with certain criteria (triggers).
Extra Conditions
Evolving markets require more layers of discipline to be added along with severe and rigid conditions. Because these extra conditions might not work under pressured markets, as then the screening process would be devoid of any opportunity.
Here, now, the strictness of rules would ensure accuracy in the system and help the screening systems evolve as well.
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