[The market is always changing – so here’s what you must do] | The Real Rayner Teo

[The market is always changing – so here’s what you must do]

Around 2006 to 2012, the Nikkei futures were heavily traded among proprietary traders in Singapore.

That’s because the Nikkei is traded across multiple exchanges like SGX, OSE, and CME—and this offers arbitraging opportunities.

Let me explain how this works…

Let’s say you can buy 1 Nikkei contract for $100 on SGX, then you quickly sell it on CME for $101—earning you a risk-free profit of $1.

Now, when you trade many contracts and do these many times a day, it’s possible to earn 6-figures a day.

So, many proprietary traders exploited this inefficiency and made good money for several years.

Then, something happened…

Algorithms entered the market to profit from this inefficiency.

As you know, machines are faster than humans and slowly, the market became efficient and the “easy money” days were over.

In the end, most traders couldn’t adapt to it and eventually, quit trading altogether.

So here’s the lesson:

There’s no guarantee in trading.

Just because something has worked in the past doesn’t mean it’ll work in the future.

That’s why you must remain a student of the markets so you can adapt to ever-changing market conditions.

Pro Tip:

Focus on trading strategies that exploit behavioural biases because we are prone to making poor decisions based on our emotions—which makes the strategy likely to continue working.