Trading all conditions? Money Maker or Account Taker?

Is trading all conditions a realistic goal? It's certainly an idea that is planted in the heads of many aspiring traders. You've probably seen it, those "magic beans" systems for sale that work in all markets, on all timeframes, in all conditions. It's a great sales pitch because it basically covers everything. It's not very realistic and every professional trader I've ever met specializes in certain areas, so there is no precedent for it in the real world of trading.

This was one of the topics discussed in the October Group Therapy session. A monthly informal review for our Institutional Education customers. We are making this months recording public as it didn't discuss the Institutional course as mush as it discussed a few common pre-conceived ideas traders hold.

You don't need to be a trading guru to act as a second pair of eyes for a fellow trade, before we go to the recording, let's consider a couple of emails I got from customers recently...

I am trying to trade around the combine rules for Topstep Trader.  One day I’d like to give it a try.  My goal was to trade around the 50K combine rules for two weeks and see how I go.  As I thought I went okay, I thought I would trade around the 100K combine rules as of last Friday.   Last Friday evening my time was an eye opener.  The volatility just dried up.  The bids and offers and limit orders just grew in size and there were so many ice-berg orders.  The market was just grinding and  I was cut to pieces trading breakouts.  The same for Monday evening my time.  I remember you saying you need to adapt to market conditions and I did not as this was really the first time I had confronted such a slow grinding market in CL.  

And another one...

All in all, I have had moments when I felt I could see what was going on, and other times when I didn’t have a clue. The hardest times, I think – for me, is when the market is mid range or by it’s VPOC. I have a hard time deciding if an absorption play would be good, or if momentum suddenly picks up, if I should look for a momentum play….and then where is my stop and target?

The larger context of the emails these texts came from was of traders struggling. The tone of both emails was quite negative or downcast. Yet if we took a "glass half full" attitude what you'd see here is:

  • Traders that can often get in tune with the markets
  • Traders that can see what's going on at those times
  • Traders that can tell when conditions change

In other words, 2 traders that very likely already have what it takes to be profitable. But they are struggling trading all conditions. Taking from the market when conditions are good but giving it back when they aren't. They both asked how they would trade these other conditions - that they can clearly identify as the conditions change. The simple answer is....


Yes - do not trade those conditions. Switch it off. Do something else. When you see the market revert to conditions that are tough for the way you trade. Stop trading.

I am not saying you cannot trade in different market conditions. What I am saying is you don't run before you can walk. Neither of these traders are profitable yet. It would make so much more sense for them both to focus on just what they can trade and start booking some profits. Some weeks they may trade only 2 days out of 5 because of the conditions. But what is better - losing money trading 5 days a week or making money trading 2?

I spoke to a professional trader friend about this and described the emails above. How these people can see it clearly some times and not others. His response was "Welcome to trading". Which pretty much sums things up.

There is a general consensus among retail traders that profitable is the final goal. It's not - it's a milestone on the journey. Prop traders will get profitable on just a few contract first because there's no way the firm will risk too much on them. As they grow, they get to risk more, they get to trade more markets, they get to trade different scenarios/conditions. Trading all conditions isn't high on their list of priorities.

If you see profitable as a milestone, it becomes more acceptable to just focus on times the market is clear. If you watch Crude futures, there's usually 2 or 3 times a day where it breaks on a decent run and there's opportunity to take momentum trades. There's days where it doesn't happen at all. If you were able to catch those breaks and profit from them and just ignore everything else for a couple of months (and see your account grow for the first time), then surely you'd be in a better place mentally and emotionally when it comes to your trading.

Even if it's just clear to you a couple of times a week. Just trade that, then push that advantage all you can. Get to that profitable milestone and don't worry about what comes after it.

Of course you will want to expand your trading - but if you can't master one trade scenario, you won't master a bunch of them.

The October Group Therapy recording is below. This topic was discussed and a number of other developmental issues.

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