The goal of our walks in the wilderness park is to let the dog do his business and to safely get a healthy workout in nature (as opposed to the monotony of a treadmill gym workout).  Although in theory anything could happen (e.g. we could be mauled by a Florida panther), we are in a wilderness park, not walking on an interstate highway.  This reminds me of trading a positive expectancy model (a generally predictable approach to the problem of staying financially healthy) as opposed to just gambling (walking on the shoulder of the interstate highway) or investing in T-Bills (exercising on a treadmill).

Because we are in the wilderness park, after parking the car, we let the dog lead us through the trails – this is similar to letting the price action in the market determine how I will trade my positive expectancy model (long side, short side or remaining flat).  Since the dog leads the way, he will sometimes lead us to a dead end.  This is like a trade that goes nowhere and gets stopped out for a small loss.  We follow this nowhere walk in the woods to its logical conclusion and then I turn the dog around and go back to the car… end of walk.  Maybe not the best workout, but the dog did his business and we know to avoid that particular dead end walk in the future.

However, there are other times when the dog leads us into a new, unknown path – of course this new path could lead to another dead end, but sometimes it leads us to an entirely new trail that intersects with one of our regular walking paths.  In other words, sometimes by just following the price action I can participate in longer, unforeseen trending action than I would have predicted had I made assumptions about trend duration based on past market behavior.