One of the most common — and challenging — questions I get from traders, especially during tough stretches, is this:
“How do I know if the issue is with me, or if the market has changed?”
Closely followed by:
“How do I know when to adapt?”
These are fundamental questions — the kind that come up during slumps, streaks of underperformance, or when previously reliable strategies start failing. And while there’s no easy, black-and-white answer, there are principles you can apply to navigate these periods with clarity and control.
Let’s dive in.
It Always Starts With Accountability
Before we dissect whether it’s you or the market, the first rule is this: own the outcome.
Whether you’re facing bad luck, a shifting environment, or poor execution, it’s ultimately your responsibility to respond and adapt. Blaming the market won’t help. Hoping things “go back to normal” is a dangerous mindset.
When you’re in a slump or struggling to generate consistent P&L, the default assumption should be: “I need to review my process.” Nine out of ten times, something is off — either in your execution, selectivity, risk management, or in your awareness of how the market has evolved.
The Most Common Culprit? Poor Selectivity or Fighting the Tape
When experienced traders start to underperform, the most frequent root cause isn’t mysterious — it’s usually one of two things:
- They’re being too loose with their criteria and taking trades outside of their proven playbook.
- They’re fighting the market trend, trying to force their strategy into a regime that no longer supports it.
That’s why the first gut-check questions you should ask are:
- Am I sticking only to my highest-probability setups?
- Am I trading names that are truly in play, or forcing trades in low-quality names?
- Am I respecting the tape, or trying to outsmart a trend that has clear momentum?
Even before identifying whether it’s a market regime shift or a personal performance dip, the immediate solution is the same:
Get more selective. Scale down size. Get back to base hits.
This creates space to assess the situation clearly and prevents further damage while you figure out what’s changed — if anything.
So… Can the Market Change?
Absolutely. Markets evolve all the time. A strategy that thrived in a high-volatility, momentum-driven tape might fall flat during low-volume, range-bound conditions. If you were pressing long momentum trades in early 2022, but failed to adjust when we transitioned into a bear market of lower highs and lower lows, you likely experienced a painful learning curve.
That’s the thing about markets: they don’t announce when they change.
You have to be tuned in enough to notice. And even then, your edge won’t disappear overnight — but it might degrade slowly until it’s no longer effective in its current form.
Practical Questions to Ask Yourself
If you’re unsure whether it’s you or the market, start here:
- Am I only trading my playbook setups, with all criteria met?
- Are the stocks I’m trading actually in play, or am I reaching?
- Am I executing cleanly, or making emotional decisions?
- Has volatility shifted significantly?
- Are key themes (like mean reversion, breakout follow-through, sector rotation) behaving differently than usual?
- Are other traders using similar strategies also struggling right now?
That last question is especially useful. If several traders in your network — or in your firm — are also underperforming using similar strategies, it’s likely the market itself has shifted. But even then, the response should still be the same: reduce size, review your playbook, and stay defensive until clarity returns.
The Power of Recency Bias (In a Good Way)
One of the most practical things you can do to stay adaptive is this: weigh recent data points more heavily than long-term performance.
Many traders fall into the trap of relying too much on historical stats. They might say, “This strategy has worked 80% of the time over the last year.” But if your last 10 trades are only winning 20% of the time, that’s a loud and clear signal.
Recent results matter. In trading, adaptability matters more than long-term averages. If something’s not working right now, don’t wait for a full statistical breakdown — act now, protect your capital, and reassess.
Create specific rules for:
- When to size down (e.g. after X number of losing trades or a 50% drop in win rate)
- When to size back up (e.g. after consecutive winning trades or a regained edge)
- What indicators suggest changing market conditions (e.g. VIX levels, volume trends, sector activity)
Learn From the Market Environment
It’s not just your trades that provide clues — the entire market is constantly giving you feedback.
- Is volume drying up across the board?
- Are breakouts failing consistently?
- Is price action choppy with no follow-through?
- Are sharp reversals more common?
These are regime signals. Start logging them in your weekly reviews. You’ll begin to recognize patterns faster — which can save you weeks or even months of underperformance.
For example, at SMB Capital, many traders use VIX thresholds to adjust their strategies. A higher VIX environment might support breakout strategies and momentum scalps. A lower VIX, on the other hand, may favor mean reversion or slower swing setups.
Being aware of this — and using it to proactively adjust your plan — is what separates the adaptive traders from the reactive ones.
Use Your Network and Reviews as a Compass
One of the best ways to stay in sync with market changes is to stay connected with other traders. (Like joining a Trading Pod!)
Weekly or monthly review calls with your pod or trading group can provide invaluable context. Sometimes you might not notice something in your own trading — but hearing the same patterns or struggles echoed by others can bring clarity fast.
And don’t underestimate the value of structured reviews. Look back over your trades regularly and ask:
- What’s working now?
- What setups are fading in effectiveness?
- What adjustments are necessary?
This level of intentional reflection is where adaptability is born.
The Hard Truth: There Is No Perfect Answer
Unfortunately, there’s no magic rule that tells you with certainty whether it’s your execution or a regime shift. Markets are messy, non-linear, and constantly evolving.
But here’s the good news: you don’t need a perfect diagnosis to act.
If you’re underperforming, take accountability, size down, tighten up your criteria, and do the work to identify what’s changed. This is the safest, most professional approach to navigating tough periods.
And most importantly: stay humble and flexible. In trading, rigidity kills performance — but adaptability sustains longevity.
The question of “Is it me or is it the market?” is one every trader faces — not once, but over and over throughout their career.
The answer is rarely clear-cut. But if you build the discipline to:
- Take accountability,
- Observe objectively,
- Cut risk when needed, and
- Constantly re-assess your edge,
…you’ll be in the best possible position to survive and thrive across every kind of market.
Remember: in trading, uncertainty is constant — your adaptability is the edge.
