Attack Like a Crocodile

This column was originally published on RealMoney on June 28 at 1:35 p.m. EDT. It's being republished as a bonus for TheStreet.com readers.

One constant in the financial markets is that precious few things are constant. Volatility ebbs and flows, sectors fall in and out of favor, cash is either a pawn or a king. The underlying reason for this constant change is the ability of the crowd to adapt.

We make money by identifying and capitalizing on some type of dislocation. For example, when buyers are far more aggressive than sellers, price rises. We only profit by early detection of this dislocation because our actions gradually rebalance the relationship between buyers and sellers, thereby ending the moneymaking opportunity.

The most consistent speculators understand the dynamic nature of the market. They have different methods of surviving and thriving. They have the ability to adapt their style. They trade the way crocodiles hunt, always adjusting to the present environment. ...