Adapting to Changing Market Conditions

04/22/2015 6:00 am EST


Andrew Menaker, PhD, of, uses a quote from arguably the most famous martial artist of all time—Bruce Lee—to illustrate that like martial arts, having a greater sense of self-awareness can help a trader better adapt to changes in market conditions.

The martial artist Bruce Lee once said, "True freedom lies in self-awareness."

I believe Bruce Lee's association between freedom and self-awareness stems from a key principle of martial arts: the ability to quickly adapt to a situation.

How easily do you adapt to changing market conditions? How do you know whether what you’re looking at is a pullback within a larger trend or a reversal? How do know if that breakout will continue?

You don’t see the market as it is; you see the market as you are. Your hopes, fears, expectations, and beliefs act as a filter for your perception of the market. And this filter projects a structure onto the market that forms the basis for your entry and exit decisions.

You don’t see the market itself, you see your projection of it. It is simply human nature to see things through our own personal filter.

Traders lacking in self-awareness have a greater chance of responding to the market in a rigid and/or repetitive maladaptive fashion.

And this is why self-awareness is very beneficial for a trader. The greater awareness of how your personal filter operates, the greater chance you have of responding to the market in a more adaptive way.

By Andrew Menaker, PhD,

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