Know when NOT to stick to your rules


I did not follow my process because I have a meta-process for adapting my process. In other words, I am constantly scanning to see if this time really is different so that I can adapt to changing conditions as quickly as possible. I don’t want to be trading mean-reversion (which worked well through much of the period of the chart above) when we’re now in a trend/momentum environment.

This is why trading is so difficult. In most performance fields, we can count on stability: the pitching mound does not go from 90 feet from the plate to 60 and then 120. The basketball hoop does not go from 10 feet high to 12 and then 8-1/2. The rules of chess are constant throughout tournaments; the rules of markets can change over the course of a week.

Again, what a great explanation of the quote: know, when not to stick to your rules

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