Good morning, traders…
Jeff here.
Imagine this: You find the perfect setup that works for you, over and over again…
Everything in your trading is going well. Your confidence is surging, your trades are working, and your account is growing…
Until it isn’t.
Suddenly, those slam-dunk trades turn into fast, demoralizing losses.
You’re left scratching your head, wondering why your go-to pattern doesn’t work as well as it once did.
Sound familiar? Then it’s time to pay attention…
The sad truth is that no setup lasts forever. The market always changes, meaning the effectiveness of strategies changes too.
I notice a lot of traders are experiencing this phenomenon right now.
The market is cyclical. It goes through phases. There’s never one pattern or setup that works all the time.
Realizing this is a major breakthrough. But it can be frustrating for less-experienced traders — especially if you haven’t yet built a diverse “trading toolbelt” to pull from.
This is what the market does. It constantly morphs from one phase to another, trying to trick you into making incorrect trading decisions.
And just as you’re getting comfortable with the way this bear market trades, there will likely be a trend reversal to the upside.
With that in mind, let me show you why you must adapt your trading to the shifting market conditions — and how to do it…
No Trend Lasts Forever
Adapting your strategy is crucial to long-term trading success.
After all, the markets are cyclical. Trends come and go, just like they do in art or fashion.
But when a particular setup you’ve been trading stops working, you need to have another strategy ready to go.
For example, as the pandemic shutdowns persisted throughout 2020 and 2021, the tech sector was hotter than ever.
It made sense. With in-person abilities limited, more people used tech than ever before. That’s why the Nasdaq was surging for two years straight.
Bulls were scalping or swinging tech calls throughout the entire pandemic bull run, making a fortune.
Now, imagine you’d been using that strategy, and then January 2022 rolled around…
Suddenly, it was impossible to make money playing tech calls. As the Fed began hiking interest rates, every long position in tech started getting destroyed.
If you didn’t switch setups … you were doomed.
And now, history is repeating itself. The overall trend in the market has been shifting recently.
Extreme post-election bullishness reversed into a violent correction led downward by tech and momentum stocks.
And as the market trend shifts, your trading strategy should change with it (more on that in a minute)…
Trading Like a Golfer
Are there any golfers out there? I love to golf.
Think about how professional golfers build a bag.
PGA tour pros carry a wide variety of clubs, knowing exactly which one to pull out for each unique situation on the course.
As a trader, you should do the same. Build a diverse tool belt of strategies that benefit from different market conditions.
This is especially true now, as sentiment is changing quickly.
Whether this is the end of the secular bull market or simply another garden-variety correction remains to be seen…
But regardless, you should be adapting your trading system to fit the moment…
3 Tips for Shifting Market Corrections
Hold Bullish and Bearish Positions
During uncertain periods in the market, I like to have both bullish and bearish positions in my portfolio.
It’s sort of like putting a straddle on in two different stocks. I lose some upside, but I’m able to hedge against disaster.
No one knows what’s gonna happen next week, tomorrow, or even an hour from now — and I want to be prepared for any possible outcome.
Be Patient
In market corrections, many traders will try to be a hero and “catch a falling knife.”
But I suggest being patient. Let the initial correction shake out. Don’t fall for false breakouts.
We’re likely to re-test the recent lows on the major indexes — and possibly even head lower — before finding a durable bottom.
Don’t get too aggressive — long or short — when the market is this unpredictable.
Paper Trade Alternate Setups
If you’ve been dip-buying all year (and now need a new setup), start by paper trading patterns and strategies that you believe could work in this tape.
Don’t blindly risk your money on a new pattern you haven’t tried yet.
Prove that the setup works with “monopoly money” before using it in live trading.
The traders who survive long term aren’t the ones who stubbornly stick to one strategy — they’re the ones who stay nimble.
Markets shift. Setups stop working. But if you’re flexible, you’ll always have an edge.
Right now, things are changing fast. If you’re still trading the same way you were six months ago, it’s time to adjust.
Stay cautious, stay open-minded, and most importantly — stay ready.
Happy trading,
Jeff Zananiri
P.S. In a market this unpredictable, there’s no better strategy than Burn Notice trades…
They’re quick, overnight options plays that won’t overexpose you to broader market risk.
If you want to understand exactly how (and why) these trades are perfect in this environment…
Join Danny Phee for a LIVE BURN NOTICE WORKSHOP … This SUNDAY, March 23 at 1:00 p.m. EST
Stop guessing, start burning — Click here to reserve your seat.
*Past performance does not indicate future results
