Saturday, October 10, 2009


1 : capable of being flexed :pliant
2 : yielding to influence : tractable
3 : characterized by a ready capability to adapt
to new, different, or changing requirements

While sticking to trading rules and what works for you is part of being disciplined, how you adapt those rules to a fluid market can make all the difference in the world. Do you bring a preconceived notion of what should happen on a chart on any given day, or do you allow the price action to speak to you, and remain flexible enough to use your trading triggers to adapt to the tape, not the other way around. Yesterday was a range bound day, but if you're only willing to trade on trend days you missed some good opportunities. If you only like to trade bearish tapes, you missed the trade. Yes, it's perplexing to continually watch the tape rise on low volume, poor fundamentals and an entire litany of reasons it should not continue to advance.... but it is what it is, and as traders it's our job to adapt, as the tape owes us nothing.

"The least flexible component of any system is the user."
Lowell Jay Arthur

I ventured out of my normal realm of just looking at charts this weekend, and checked the current COT reports for both the FX Euro and US Dollar ICE Futures. For those who have never used COT reports, it is often used as a sentiment indicator... (non-commercial traders as "dumb money," versus commercial traders as "smart money.") As you'll see on the data below non-commercial traders remain net long on the Euro, and net short on the USD, while the commercial traders increased short positions on the Euro and increased long positions on the USD as of this report. Just another tool in the tool box, and something to consider and keep an eye on. Click to enlarge.

Euro FX/ CME

U.S. Dollar Index - ICE Futures

Meanwhile... gone sailing until Sunday! ~Keirsten
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