So here I am. Adapting to the new normal. New schedule, new workplaces, new tools. Less access to information, fewer opportunities to trade. New perspective and new opportunities to learn. New problems. The new normal… Every day we are learning something new. I guess, in a way, every day is “back to school”. If you are open to the lessons that the market is teaching you.

So what is the market telling me?

PANIC!

EVERYBODY PANIC!!!

That is always the case, right? We have to deal with the crisis of the day. And there is always a crisis out there. The market is always telling us to panic and buy gold, even when that is not the right thing to do…

By trying to time the next pullback, we miss the rally…

So with cash to deploy, I have been waiting for the right time. Trying to time the market and waiting and waiting and waiting… By trying to time the market top I have successfully missed the past couple rallies. The market was telling me one thing and doing another. That is often the way it works.

Part of the reason that I have not been in the market is situational. Dealing with family emergency after family emergency. But they never stop coming. Life goes on and so must we. We have no choice. We must continue to prepare for retirement even if it may never come…

You have to trade amid the crisis and turmoil. In some ways, that is all there is…

Looking at the charts lately, I could easily see that the market was toppy. Listening to the talking heads you could hear everywhere that the market was ready to pull back. All this information confirmed my assumptions. I knew the pullback was coming. I just knew it! So I waited and waited and waited as the market ground higher, I waited. I am still waiting…

The charts tell me we are at a top. The doom and gloom out there, tells me we are at top. The news cycle is always ready to throw a new crisis into the mix to crash everything and when you throw market fundamentals, economics and politics into the mix, you know that that pullback is coming any minute. So you play it safe and wait for the market to pull back and for everything to go on sale.

Problem…

No one told the market it was supposed to pull back… So it didn’t. It just went on, to do what it does. Price in all information at every given moment. To integrate it all into a single price at every instant and to continue on…

The economy, international politics, terrorist threats, the weather. It is all so complex and it all adds into the market price at a given instant and who knows what will change at any given moment. No one can predict the future. Especially not the people who are so confident that they can predict the future. The market will do what it does and it will continue to. That is what makes it so interesting and so dangerous.

So what is a trader to do?

Trade the market you have, not the market you want… You never really know what you have, so you have to learn to play carefully. Defensively. To protect yourself while taking advantage of opportunity. Carefully…

Just as swimming in the ocean can be fun, it can be dangerous. So can swimming against the market…

Waves can crash anytime, in the ocean and in the market…

So today might be the next crash. Or it might be another day of the slow grind higher. The slow grind up that can make you rich. If you are in the market. The grind up that can leave you poor if you don’t participate. But beware the crash, the crash that can take it all away in an instant…

So now that we have defined the problem – the market will do what it does and we can’t predict the future – what am I going to do? When you want to profit from the market, you have to be in it. You have to play to win and you have to pay to play. The costs are money, time and opportunity…

How to play, without the benefit of prophesy?

Defensively…

So to play, lately I have been in cash. A good play in down markets. I leave my conservative retirement alone to work. I play with the money we talk about here. Play to learn…

Retirement money, working the magic of compound interest… Trading money, in the game to learn…

I use the relatively small trading money we talk about here to learn, from the market. As I gain experience and knowledge over the years, I trade the market to beat the market and I learn that I am not as smart as I think I am and I still can’t predict the future.

So what to do?

For me, I need to get out of cash because the slow grind higher may continue. Buy in to protect against missed opportunity… However, I need to protect myself on the downside in case that crash comes. Protective stop limits on all my trades…

This is how I will play it. Until this becomes obviously wrong. Then I will adapt. You have to adapt to what the market does because the market will do what it will do. It always will. The market doesn’t care what you or I think and it really, really doesn’t care about that guy who claims to predict the future. It just does what it does and keeps doing it… So understand that and be ready to trade the market as it is and protect yourself from what will be.

The only constant is change… Accept the world as it is and be ready for change. Adapt and succeed…