Thread by @TradetheMatrix1

Every setup/patterns performance is quite different in weak or strong cycle. Different enough that it impacts edge to high degree.
#smallcaps #trading

Thread:
1.

For example parabolic squeezes they just don't happen in weak cycles. In strong cycles you will have few of them and one of those will be picture perfect one. Significant "show up" rate difference for pattern between the cycles.

2.

Type1s in weak cycles don't squeeze past HOD much usually. Even if they do the price returns to prior HOD level soon. In strong cycles they often squeeze way past. To think this doesn't affect your risk management on short trades is mistake.

3.

Distributions show up in all markets conditions. But it's follow-through rate that changes big time. In strong cycles you get a lot of fakeouts. Support breaks but then reclaims fast and distribution turns into semi type4. This impacts shorting edge.

4.

Nobody wants to hear that adjustments to trading approaches are needed due to cyclical changes. Everyone wants to trade like zombie or AI same style through entire year and then wonder "hey why are there cyclical slumps in my performance?".

5.

Even if you do adjust it will still be struggle for some time because it's a skill that is learnt over time but at least that way you are under control somewhat. More than praying for "crazy" period not to show up again ever.

6.

Since most of us on retail side have relatively weak edges (low positive margin) any adjustment made well adds and matters at the end. Because cyclical market changes wash out the positive edge expectancy the most on setups/patterns, more than anything else.

7.