Adam Theory is a complete trading system. When applying Adam Theory, we always know how to trade—in which direction, when to enter, and when to exit. What more do we need from a trading system? Yet, Adam Theory accomplishes all this solely based on what the market itself says... not what we say about the market. For example, Adam Theory never attempts to pick tops or bottoms. In fact, it always gets tops and bottoms wrong. But if you think about it, isn’t trying to identify tops and bottoms an arbitrary exercise?  

Adam Theory focuses on what *is* happening... not what *should* happen. It is not arbitrary because it does not operate based on parameters we impose. Adam Theory is so simple that even a five-year-old could use it.  

Before delving into Adam Theory, we must first discuss what a system is... because Adam Theory is a system. To truly understand and appreciate its essence, we must recognize how it differs from other systems. Thus, for context, let’s briefly examine some other systems.  

First, if we were to design the *perfect* trading system, what would it look like?  

**Simple?** Yes. I believe the simpler something is, the more fundamental it becomes. For instance, nuclear energy is derived from a very simple formula: Energy equals mass times the speed of light squared. The more complex something is, the further it strays from its essence.  

**Market-following?** Correct. It should focus on the market’s actual behavior, not what it *ought* to do.  

**Adaptive?** Absolutely. It must be flexible—able to adjust swiftly, even instantly, to any market condition.  

**Timeframe-agnostic?** Yes. It should perform equally well whether applied to weekly charts or 30-minute charts.  

**Non-lagging?** Right. It must reflect market movements in real time.  

**Self-measuring?** Indeed. Without our interference... the market measures itself.  

**Non-arbitrary?** Most importantly... it must avoid arbitrariness.  

**Market-reflecting?** You might never phrase it this way! But yes, it must go with the flow—completely yielding to the market’s actual behavior.  

Now, let’s examine some commonly used systems, tools, and indicators—methods typically employed by traders. To understand the "perfect" system, we must first explore alternatives. (In truth, no "perfect" system exists; we’re merely trying to define the ideal conceptual framework.)  

**Moving Averages?** They do follow the market and avoid predicting what *should* happen. But they’re arbitrary because someone must decide the timeframe, and they lag the market.  

**Oscillators?** The most popular oscillator is the Relative Strength Index (which I invented years ago). It focuses on identifying reversals, thus retaining a "should" element. It’s also arbitrary since the timeframe must be chosen.  

**Cycles?** Cycles attempt to pinpoint tops and bottoms—predicting what *should* occur. They’re highly complex but less arbitrary because they rely on current market behavior rather than fixed periods.  

**Elliott Wave Theory?** An intricate forecasting tool centered on what *should* happen.  

(Note: None of this implies these methods are ineffective. Many work well. We’re simply using familiar examples to explore deeper concepts.)  

**Linear Regression?** Less arbitrary but still leans toward "should." It also lags.  

**Contrary Opinion?** Since it tries to predict reversals, it falls into the "should" trap and lags.  

**Trendlines?** They aim to forecast future moves and are somewhat arbitrary (someone must choose the timeframe). Yet, they’re among the least arbitrary tools because the market itself dictates where lines are drawn.  

We could continue, but this suffices for conceptual clarity. The system we seek must fundamentally differ from all others. It must focus solely on *what is*—not *what should be*. It must mirror the market, adapt instantly, and exclude arbitrary inputs. Above all, it must be pure and simple.  

Now, knowing what we’re after, we’ll systematically explore how Sloman developed Adam Theory. But before leaving systems, consider Sloman’s perspective:  

*"The most powerful tool in trading is the simplest, most obvious thing—so obvious it’s startling. Deep down, we crave a system that handles everything—buy here, sell there—automatically, so we don’t have to watch or understand the market’s essence."*  

But here’s the truth (at least as I see it—and truth is infinite, while my mind is very finite): **All systems eventually fail.** Not because they’re flawed, but because failure is inherent in their design.  

Why? Markets perfectly reflect life itself—eternally the same yet constantly changing. Or more precisely: *The core never changes; only the surface does.*  

Adam Theory deals with the market’s unchanging essence. But this essence can only be grasped through *alignment*—a personal, intuitive harmony with the market. While alignment’s principles remain constant, their expression endlessly evolves.  

Crucially, alignment is about surrender—not *calculating* market moves but seeing them directly, like a five-year-old would. This is why our market "knowledge" ultimately backfires.  

Automated systems (especially computer-driven ones) are easy to design. They pinpoint exact entry/exit points, and when well-built, they work—for a while. Then, inevitably, they fail spectacularly, leaving us baffled: *"But it worked so well before!"*  

Consider this: Years ago, "computer system" funds thrived; now many collapse. Why? Designers blame overlooked tweaks, but the issue runs deeper.  

(I’m not anti-computer—I love them. I wrote this on one! But they can’t replace judgment.)  

Automated systems, with or without computers, only handle superficial market layers—which keep shifting. They’re always slightly behind, great for past data but flawed for the unpredictable future.  

It’s no accident that today’s top traders don’t rely on automated systems (though they may reference them).  

One (who made ~$8M in 1986) said: *"I focus on controlling downside risk. The only way to stay consistent is by making decisions myself."* He added: *"If my long position falls—even if charts and systems scream ‘buy’—I know I’m in trouble."*  

Another: *"Systems sometimes profit if you sit still through storms. But I hate sitting still."*  

A third: *"I tried sticking to systems, but within days, I’d abandon them."*  

Perhaps the 20th century’s greatest trader noted: *"The trend is toward blending numbers and judgment. Those who only crunch numbers won’t keep their money."*  

In short, trading success hinges not on "knowledge" or analysis, but on shedding preconceptions and flowing with the market’s ever-shifting tide. You must face reality: *See where it’s actually going.