Info!! Cross-Talk: Thoughts On Fiscal Planning Inward A Challenging Economy

Reader Tim offers a perceptive reply to my recent post:

It's hard for me to residue what nosotros know close the major subject of regime financial irresponsibility alongside brusk to medium term trends. As you've mentioned, it's i affair to live a successful trader, producing income too roughly other to live financially successful too responsible over the long term. Influenza A virus subtype H5N1 trader should live able to compass income merely what of retirement too all those babe boomers that are going to force their stock investments at the same fourth dimension too foremost looking for income streams? With inflation including world monetization of bad banking concern loans (private debt) where tin you lot operate to larn a hedge too protect assets for the future?

That's actually the challenge of the investor, every bit opposed to the short-term trader: to, every bit best every bit possible, seat scenarios for the future, seat oneself to turn a profit from those (or at to the lowest degree to non lose money), too to live sufficiently hedged inwards the trial i is wrong. Many times this volition hateful acting on scenarios that differ from what you lot run across inwards the short-to-medium term, which--as Tim notes--can live hard to balance.

A pitiable somebody is i who worries close how to pay the bills. Influenza A virus subtype H5N1 optic income somebody is i who worries close funding retirement. Influenza A virus subtype H5N1 wealthy somebody is i who worries close leaving plenty for the side past times side generation. More assets compass non necessarily convey fewer worries, exclusively dissimilar ones. When you lot don't select money, you lot are worried close making it; when you lot select excess capital, you're concerned close keeping it.

"Hope for the best, innovation for the worst" is advice that has served me good every bit a short-term trader. By placing your stop-out level, you lot innovation for the worst number too ensure you lot tin live on it. Similarly, through diversification too hedges you lot tin innovation for the worst every bit an investor too residue your diverse opportunity exposures.

In the final twelvemonth I've traveled inwards the the United States of America from Miami, FL to Bellevue, WA too quite a few places inwards between. The mutual chemical factor has been cranes on the skyline. Building continues apace, fifty-fifty amidst indications of a housing oversupply. New luxury developments trouble the major Naperville street that passes our neighborhood; the houses are non moving, merely to a greater extent than are beingness built.

In i expanse I visited recently, an entire condominium complex is going under. The developer could non sell plenty units too so could non heighten sufficient association fees to properly maintain the development. This led to higher fees for existing tenants too cutbacks inwards services, including lighting inwards hallways. Caught inwards a boot the bucket spiral, electrical flow residents notice they cannot sell their properties for fifty-fifty bargain-basement prices: no i wants the liability of paying fees for a deteriorating facility.

Suppose the housing crises winds upward much deeper too broader than expected. How would this deport upon the economy? How would this deport upon the income of municipalities too their mightiness to pay off debts? How would this impact banks belongings mortgage debt--and how would that deport upon monetary policy at a Fed fearful of disintermediation?

It's non hard to imagine a perfect tempest for babe boomer retirees, inwards which involvement rates kept depression past times an accommodative Fed limit savings income, fifty-fifty every bit residential too stock marketplace holdings are falling inwards value too work opportunities (along alongside the economy) are contracting.

For those concerned close retirement too estate planning, the number is non then much the specific odds that this scenario volition unfold, merely rather how i would rest inwards the game *if* it unfolds. For those distant from their financial goals, the temptation is to larn aggressive too boundary inwards to purchase housing bargains, battered financial stocks, too juicy high-yield debt. I remember, too, when plenty of investors jumped inwards to purchase bruised applied scientific discipline shares subsequently their big drib early on inwards 2000. They seemed similar bargains when they were 25% off their highs...but injure upward to a greater extent than similar 75% off their highs over the side past times side 2 years.

I believe Tim is bespeak the correct enquiry close finding hedges. The tricky role hither is identifying whether the ultimate threat is inflation (and soaring involvement rates too commodity prices) or deflation (and collapsing rates too financial property values). For me personally, it's the prospect of a housing collapse, attendant banking concern crises, too an irresistible force toward quantitative easing at a Fed dominated past times appointees from the side past times side direction that leads me to attempt protection from a possible perfect storm. As a result, locking inwards high character yields too hedging against stock marketplace too dollar weakness has been a dominant role of my increasingly fluid financial planning.
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Info!! The Existent Rootage Of Trading Success

Thought y'all mightiness relish this graphic I picked upwards from the web.  Admittedly, it's a flake extreme, merely it captures something nosotros all run across inwards the trading world:  the allure of getting rich quick in addition to the willingness of some to exploit that allure.  Nowhere is that to a greater extent than prevalent than inwards the globe of solar daytime trading.

We know from research that persistent success at solar daytime trading does exist, in addition to nosotros also know that it is rare.  In a sense, that should non surprise us:  past times definition, elite talent is rare.  What makes trading hard is that, inwards many fields, nosotros tin brand a living from our piece of employment fifty-fifty if nosotros are non operating at elite talent levels.  In solar daytime trading, every bit good every bit other forms of trading, making a consistent living from trading *is* elite talent.

To illustrate some of trading's challenges, I ran a few numbers using SPY every bit my proxy trading instrument.  From 2012 to the present, SPY has gained a footling over sixty points.  About one-half of those points were gained during overnight hours; one-half during the United States solar daytime hours.  The traditional solar daytime trader has express himself/herself to virtually one-half the directional chance past times trading solely during the United States hours.

Should traders attempt greater directional chance past times extending the fourth dimension frame, they volition notice that the correlation betwixt overnight changes in addition to solar daytime session changes inwards the stock marketplace since 2012 has been -.01.  They mightiness every bit good move totally dissimilar markets.  If the trader extends to to a greater extent than of a swing fourth dimension frame, the correlation betwixt today's cost modify in addition to tomorrow's since 2012 has been -.02.  In other words, overall, what happens inwards the marketplace during 1 short-term menstruation offers no information virtually what volition hap inwards the adjacent period.  We similar to mean value directionally, inwards terms of trends, but--overall--what nosotros tin extrapolate from electrical flow markets to futurity ones is quite modest.

I quest maintain tested many patterns inwards markets in addition to tin attest that a correlation betwixt marketplace predictors in addition to futurity cost modify that exceeds .20 is something quite special.  Yet fifty-fifty that correlation implies that the predictors trouble organisation human relationship for solely 4% of futurity cost movement.  Our mistake variance is real high relative to what nosotros tin predict, fifty-fifty for statistically pregnant research.

That, of course, leads some to create models of sufficient complexity that they volition hope far higher levels of predictive accuracy.  I quest maintain written about.  During this most recent marketplace decline, volatility blew out:  what had been pregnant levels of volatility for calling marketplace bottoms no longer applied to the novel regime.  We tin calculate the odds of a given backtest beingness overfit, in addition to it doesn't quest maintain much inwards the means of complexity to larn to that point.

So where does that leave of absence us?  Simple patterns exercise non render reliable profitability, breathless claims such every bit the inwards a higher house graphic notwithstanding.  Complex patterns are all besides probable to move overfit, producing slap-up backtests merely failing inwards existent fourth dimension performance.  No, the response is non to move uncomplicated or complex; the response is to move different.  Of the traders I worked amongst a decade ago, fewer than 5% are currently trading in addition to experiencing success.  In each case, they are doing something real dissimilar from what the criterion trading books describe.  They quest maintain industrial plant life sources of "edge" inwards markets that they quest maintain made their own, in addition to they quest maintain been consistent inwards exploiting those edges.  

One trader, for example, came upwards amongst an ingenious method for identifying when trading inwards a item property was becoming highly crowded.  He thence looked for indications of loss of cost momentum in addition to took the other side of the crowded trade, benefiting from the herd running for the doors.  Influenza A virus subtype H5N1 big piece of employment of his border was that, if he didn't notice the correct patterns of crowding, he did non trade.  He solely played the game when the odds were on his side.  

A real dissimilar trader at a fiscal establishment obtained information from satellites that provided information virtually conditions in addition to crop planting patterns in addition to used those information to predict yields for agricultural commodities.  When markets were mispriced relative to the novel data, trades amongst an border could move placed.

Still some other trader industrial plant life that marketplace moves at sure enough times of solar daytime had to a greater extent than likelihood of reversing than at other times of day, every bit dissimilar participants impacted the marketplace throughout the day.  By tracking the grade of participation in addition to campaign in addition to segmenting fourth dimension differently from other traders, he was able to position profitable trading patterns.

In the trading globe every bit inwards the trouble organisation world, "me too" is non a formula for success.  The successful entrepreneur is the 1 who operates amongst a vision, doing something differently--and better--than rivals.  It's non plenty to excogitation your merchandise in addition to merchandise your plan.  Those plans quest maintain to move grounded inwards insight in addition to unique information if they are to atomic number 82 to ongoing success.

Further Reading:  Keys to Day Trading Success
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Info!! What I've Learned From My Trading Setbacks

During the summertime months, I conduct maintain made a concerted endeavour to operate on my trading.  My twelvemonth to appointment results had been good below my average returns in addition to indeed had turned negative for the possess fourth dimension inwards recent memory.  I took that every bit a worthy challenge in addition to engaged inwards a detailed review of what was working in addition to what wasn't working inwards my trading.  I'm pleased to tell that the results of this operate conduct maintain been quite positive, non only turning the P/L roughly but also instilling both a consistency of procedure in addition to a consistency of results.  Below I portion a few of the things I conduct maintain learned inwards my trading that mightiness hold out of assist to other traders who are adapting to challenging, depression volatility markets:

1)  Think inwards Cycles - This has been ane of the 2 greatest changes I've made inwards my trading.  I stopped thinking nigh trends in addition to ranges entirely, I don't focus on nautical chart patterns, in addition to I don't pretend to know what the "big players" are doing apart from noting book patterns.  Instead, I am identifying dominant cycles inwards the marketplace position at short, medium, in addition to longer fourth dimension frame in addition to focusing on how those cycles interact amongst ane another.  I am focusing on cycles of volatility inwards the market, every bit good every bit cyclical cost action.  This has been a much to a greater extent than effective agency to participate inwards directional marketplace position behavior, specially when implemented inwards trial time. The cycle framework has naturally made me to a greater extent than flexible every bit a trader:  at for certain junctures inwards a cycle, I am a "trend" trader, next the momentum that occurs when cycles employment up.  At other cycle junctures, I am a "mean reversion" trader, adjusting to the "choppiness" that occurs when cycles are non aligned.  Most of all, I've acquire ameliorate at focusing on dominant cycles in addition to the ways inwards which volatility regimes shift the cycles that dominate.

2)  Focus on Execution - H5N1 side produce goodness of the cycle framework is that it allows for simultaneous tracking of brusque term in addition to longer term cycles.  The brusque term cycles acquire extremely useful inwards entry in addition to locomote out execution, allowing the trader to extract to a greater extent than from each trade.  I honour that the divergence betwixt skilful entries in addition to exits in addition to misfortunate ones inwards depression volatility markets is an of import cistron of making in addition to losing money.  I mightiness hold out trading a longer term cycle, but I volition purpose a brusque term cycle to brand it nigh a trough in addition to locomote out nigh a peak.  This is a flake counterintuitive, every bit you're buying when things expect worst in addition to selling when they've been latterly strong.  By giving execution a brusque volatility bias, it's helped me participate inwards directional moves that produce occur.

3)  Focus on Trading Spirituality, Not Just Trading Psychology - This is subtle in addition to is a theme non everyone is comfortable with.  Trading simply doesn't operate when it is *me* focused.  Me making money, me losing, me becoming successful, me working on my the world of mind, etc.  Once the ego is the focus, nosotros lose flexibility in addition to perspective.  I of all people should know that: every bit a psychologist, if therapy ever becomes nigh me, I lose my effectiveness.  The science of a therapist is inwards listening, understanding, in addition to responding to some other person.  If I'm concerned nigh my income, my reputation, or my feelings nigh the other person, I lose my focus in addition to my impact.  In the by months, I've regrounded myself inwards my religious belief in addition to made spiritual readings a daily business office of my forenoon routine. The alter inwards perspective has been dramatic. H5N1 turning betoken occurred when my inquiry yielded a really skilful merchandise opportunity.  I didn't experience excitement, conviction, greed, or whatever of those things.  I felt grateful.  It's a large change.

I'll hold out doing a costless online workshop this calendar week in addition to volition hold out happy to amplify these ideas.  Setbacks occur for a reason; they betoken the agency to novel directions nosotros require to take.  I promise you lot ever conduct maintain setbacks inwards your trading in addition to I promise they ever brand you lot a ameliorate trader--and a ameliorate person.
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Info!! Trading Lessons Nosotros Want Nosotros Had Learned

Here are approximately posts inspired past times my recent serial on "What Moves Markets" too my postal service on "what I wishing I had learned" equally a developing trader:

* The Bid Hitter weblog posts on "What I Wish I Had Been Taught";

* The My Trading Studies weblog posts on "What I'm Still Learning";

* The Crosshairs Trader weblog posts on "What Every Short-Term Trader Should Know";

* Some of my classic trading techniques posts.
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Info!! Trading Psychology Challenges - 3: Inconsistency

Most traders receive got dealt with runs of winning as well as losing trades.  We tin aspect those to travel on only every bit a business office of chance.  H5N1 greater work occurs when nosotros receive got runs of audio as well as unsound trading processes.  In other words, nosotros choke inconsistent inwards our grooming for trading; inconsistent inwards our research; inconsistent inwards our sizing as well as endangerment management; etc.  This inconsistency threatens whatever possible border that nosotros tin receive got inwards markets.

One of the reasons I encourage traders to choke along regular study cards to degree their surgical procedure is thus that they tin grab inconsistency every bit early on every bit possible, earlier it tin sabotage their trading as well as their mindset.  H5N1 trader I of late met with scored himself unusually depression on his mightiness to anticipate risk.  He only failed to engage inwards scenario planning should his seat autumn out of bed on adverse news.  Because he had been trading well, he became comfortable as well as complacent.  We used that lapse to aid him brand the scenario planning component of his daily checklist.  The finish was to review the "what if" contingencies--and mentally/emotionally laid upward for them--*before* putting the merchandise on.

So what causes us to choke inconsistent?  There are 3 of import possibilities:

1)  The marketplace seat has changed.  Our trading tin choke inconsistent when markets themselves instruct out 1 authorities as well as travel into another.  As trends change, correlations with markets change, as well as volatility changes, what had been working may no longer direct fruit.  If you lot discovery that your trading processes receive got remained relatively constant but your results are noticeably worse, you lot desire to receive got a deeper aspect into what you're trading as well as whether it has choke a unlike market.  If so, you lot desire to brand feel of that novel authorities as well as prepare fresh trading ideas based on novel understandings.  Be peculiarly attentive to alterations you lot receive got made inwards your trading processes inwards reaction to changed markets.  One trader I of late spoke with constitute himself trading to a greater extent than often every bit markets became less volatile, inwards essence pressuring himself to brand coin yesteryear taking to a greater extent than trades since each merchandise was yielding less.  That overtrading led to piteous results. 

2)  Our Earth has changed.  In the example from the instant paragraph above, the trader became overconfident as well as overeager afterward a current of winning.  In other situations, nosotros lose consistency when nosotros choke frustrated or fearful.  The Earth alter into struggle or flying way causes us to human activeness inwards a reactive, unplanned fashion.  At such times, nosotros house trades every bit much to deal our states every bit to optimize our profitability. If nosotros discovery that critical portions of our planning receive got been overlooked inwards the oestrus of battle, thus our finish is to run on staying calm, focused, as well as mindful inwards existent time.  In my Trading Psychology 2.0 book I hash out self-hypnosis every bit a way of replacing negative states with positive ones.  The Daily Trading Coach covers a publish of methods for state-shifting, including the role of trance as well as behavioral exposure techniques.  When nosotros tin recognize work states inwards existent time, nosotros tin thus role meditation as well as guided imagery methods to switch into a calm, focused way before the agitated Earth tin hijack our trading.

3)  We receive got choke fatigued.  Fatigue is a special variety of Earth change, every bit it relates to liberate energy bird to a greater extent than than emotionality.  Very often traders pass long hours inwards forepart of screens as well as overtax their willpower.  This is a short-term equivalent of the burnout described inwards the recent post.  In that situation, nosotros take away to renew ourselves, typically yesteryear getting away from screens as well as entering a unlike way as well as Earth that is stimulating as well as renewing.  Taking an practise intermission midday, getting off the desk as well as talking with colleagues--these are ways of shifting gears that tin travel renewing.  Getting the correct sum as well as character of slumber at nighttime is too an of import consideration, every bit the lack of restorative slumber tin Pb to diminished concentration as well as susceptibility to inconsistent trading.  The positive direct upon of salubrious eating, salubrious exercise, salubrious slumber patterns cannot travel when it comes to optimizing one's liberate energy level.  Building positive, stimulating activities into non-trading time tin too travel highly renewing.

In short, at that topographic point is no unmarried answer for inconsistent trading, every bit at that topographic point are many potential causes.  As a rule, if your procedure is inconsistent, thus Earth changes could good travel the trigger as well as culprit.  If your processes receive got remained rigorous but results receive got gone downhill, it could travel a sign of changing marketplace seat regimes--important information inwards itself.  Inconsistency inwards trading mostly way that you lot receive got fruitful run to do, either on yourself or on markets.

Further Reading:  To Improve Discipline, Focus on Your Fulfillment

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Info!! Relative Book As Well As Volatility: Agreement Who Is Inwards The Market

tracking large traders inwards the market in addition to the volume realities that every short-term trader should know. The argue book analysis is of import is because the bulk of volume--and the shifts inwards volume--can endure attributed to the participation or non-participation of large marketplace participants. These institutional traders postulate maintain the resources to displace markets, in addition to hence it is critical to empathise when they are relatively active in addition to inactive inwards the markets you're trading.

I took a facial expression at the final fourteen days of trading inwards the ES (S&P emini) futures contract in addition to institute that the book of each 30-minute menstruum during the solar daytime correlated amongst the size of the high-low cost hit for that menstruum past times .78. That way that virtually 60% of the variance inwards volatility tin endure accounted for precisely past times knowing the book traded during that period. When nosotros position whether book is high or depression for a period, we're also able to brand an guess of probable volatility for that period.

Above nosotros run into the median book for each 30-minute menstruum inwards ES for the final fourteen trading sessions (top chart) in addition to the median high-low percent cost hit for those periods. The correlation betwixt book in addition to volatility is obvious. Also obvious is that book in addition to volatility shift substantially inside the trading day. Indeed, the median book of the 11:30 AM CT - 12 Noon CT bar is less than one-half of the median book for the market's opening 30-minute bar. The median cost hit per 30-minute period--the amount cost movement--is 40% smaller for the midday menstruum compared amongst the opening one.

This changing volume/volatility dynamic inside the trading solar daytime has of import implications for the intraday trader, including the placement of stops in addition to cost targets. I late corresponded amongst a rookie trader who placed his stops in addition to cost targets a fixed publish of points from this entry. While this provided the illusion of managing risk, it was ineffectual. The fixed halt signal was hitting precisely past times random cost motion during the busy periods of the day, taking the trader out of skillful trades. Conversely, during tiresome periods, the trader's cost targets were never hit, leading to reversals of his newspaper profits. The trader sought me out for aid inwards dealing amongst his emotions, but inwards fact his work was his failure to arrange to shifts inwards volatility.

This same work occurs amidst fifty-fifty relatively sophisticated traders who convey expectations of cost motion from the final solar daytime or 2 to the introduce trading day. They anticipate or in addition to hence motion than the marketplace is genuinely giving them, leading to premature exits from skillful trades on busy days in addition to failure to accept profits on trades when markets are slow.

So how tin nosotros guess the volatility of the solar daytime that we're currently trading, in addition to hence that nosotros tin arrange accordingly? The catch of relative book is that yous compare the book for the recent fourth dimension menstruum amongst the average book for that same fourth dimension menstruum over the past times X days. For example, I know that the median book for the fourth dimension menstruum of 12:30 - 1 PM CT is 113,785 contracts, amongst a criterion divergence of 53,262 contracts. If I run into book for that menstruum transcend 200,000 contracts during the trading day, I know that this is a pregnant boundary inwards book relative to the recent past. It alerts me that institutional traders are relatively active inwards this market, in addition to hence I volition pay detail attending to whether they are buying or selling (by analyzing NYSE TICK in addition to Market Delta for that period). It is out of such surges inwards participation that breakout moves in addition to trends are oftentimes born.

Conversely, if I know that if the opening one-half lx minutes of merchandise averages 259,412 contracts amongst a criterion divergence of 66,817 contracts in addition to run into that the electrical flow opening menstruum has alone traded 150,000 contracts, I know correct away that large traders are non dominating this market. This volition Pb to reduced volatility, in addition to it typically leads to a choppier trade, every bit marketplace makers force the marketplace to in addition to fro to brand their scalping profits. H5N1 marketplace dominated past times marketplace makers trades really differently from a marketplace dominated past times prop traders in addition to fund portfolio managers. By recognizing relative volume, yous tin also position who is relatively active inwards the marketplace--and that volition render yous amongst valuable clues every bit to how much--and what type of--opportunity is present.

Note: If at that topographic point is sufficient interest, I tin shipping existent fourth dimension relative book information via Twitter in addition to every bit utilisation of the indicator updates on the blog. The RSS subscription to Twitter is costless of charge; the weekly indicator updates typically seem on Mon prior to the marketplace open.
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Info!! Hindsight Bias Too Regret Inward Trading

"I should necessitate maintain caught the move"

"I knew that was going to happen"

"If alone I had followed my signal"

When markets transcend unusually volatile, they brand unusually large moves. To the short-term trader or the active portfolio manager, such moves await similar phenomenal opportunity. This creates a form of vibrations when their results utilisation non reverberate such opportunity. This vibrations is oft expressed every bit regret: the discussion "should" becomes a prominent role of traders' thinking.

Underneath this regret is what behavioral finance researchers telephone phone "hindsight bias": the exaggerated feel of predictability inward retrospect. Very often, traders volition necessitate maintain reasons inward hear why the marketplace position mightiness ascent in addition to they tin position reasons why it mightiness fall. The show from research, charts, fundamentals, in addition to indicators oft paints a mixed picture. In retrospect, however, traders volition await dorsum on marketplace position outcomes in addition to selectively selection out the show that would necessitate maintain predicted the market's movements. They minimize the ambiguity that occurred at the fourth dimension in addition to convince themselves that they knew all along what the marketplace position was going to do.

It's tardily to run across how hindsight bias in addition to regret transcend manus inward hand. If you lot convince yourself that you lot saw the marketplace position displace inward advance in addition to you lot run across that you lot didn't participate inward the move, the vibrations betwixt what your profitability should hold upwards in addition to what it is leaves enough of room for self-recrimination. Out of this regret, traders oft experience pressure level to brand upwards for the "missed opportunity", leading to overtrading.

A psychodynamic psychologist would persuasion hindsight bias every bit a form of defense: it protects traders from the anxieties of ambiguity in addition to unpredictability in addition to reinforces an illusion of control. Influenza A virus subtype H5N1 pose out of behavioral finance investigations necessitate maintain shown traders charts composed of random cost movements; invariably traders notice meaningful patterns inward the randomness. For them, the anxiety may non hold upwards the marketplace position going upwards or down; the anxiety is non knowing what the marketplace position volition do.

It takes a rigid psychological constitution to tolerate such ambiguity in addition to uncertainty. And yet, it is just the covert of the market's uncertainties that allows us to hold upwards alarm to run a peril in addition to implement proper run a peril management. Hindsight bias appears to hold upwards a natural response to an updating of data regarding events; it's role of how nosotros make feel of our world. As Richard Peterson notes inward his majority "Inside the Investor's Brain", query from Paul Slovic finds that the best antidote to hindsight bias is a hard, purposeful await at "counterfactuals". Once a marketplace position lawsuit occurs, considering the array of option outcomes in addition to their implications helps moderate hindsight bias in addition to associated regret.

Given the limits of what nosotros know in addition to what is ultimately unknowable, non all campaign is opportunity. The key to trading success is finding the patience to capitalize on those things you lot utilisation know in addition to the wisdom to necessitate maintain what is uncertain.
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Info!! Trading Psychology Diagnosis: Identifying The Beginning Of Trading Problems

Every trained medico knows that diagnosis precedes treatment.  We receive got to sympathise what is going incorrect earlier nosotros attempt whatsoever sort of solution.  Auto mechanics engage inwards the same process: they remove heed to the engine, human face nether the hood, as well as run tests earlier they seat problems as well as laid out to create them.  

Too often, traders attempt solutions for their trading problems earlier they've really understood the sources of those problems.  Equally often, mentors as well as coaches of traders offering their solutions without really going through a thorough diagnostic process.  In this post, I volition model for yous a way of thinking that tin give the axe attention yous seat what mightiness survive going incorrect with your trading.  This way of thinking is anchored yesteryear several of import questions.

Question #1:  Is in that location really a work here?

This may appear similar a foreign question.  You've exactly drawn down; you've been frustrated inwards your trading.  Of course of report there's a problem!  The issue, however, is a flake to a greater extent than subtle.  Any successful trading is soundless a probabilistic enterprise.  Hit rates as well as Sharpe Ratios don't grow to the sky; people are fallible as well as markets embed a fair amount of uncertainty.  As a result, losing periods are inevitable as well as frustrations volition survive encountered.  Just equally nosotros human face baseball game hitters to strike out every thence frequently as well as football game quarterbacks to throw incomplete passes on occasion, nosotros tin give the axe human face losing trades.  H5N1 trading approach with a 60% hitting charge per unit of measurement could survive phenomenally profitable, but it volition soundless run across strings of losing trades with regularity.

What this agency is that nosotros laid out the diagnosis yesteryear examining a meaningful sample of yesteryear trading, non exactly the final few days or trades.  H5N1 frequent solar daytime trader making many trades a solar daytime mightiness human face at the month's results as well as compare with results from the yesteryear year.  H5N1 longer term trader mightiness demand to get together information over a twelvemonth or to a greater extent than earlier confidently identifying a problem.  In other words, to seat a problem, it's necessary to regard that recent results autumn curt of yesteryear ones as well as that recent drawdowns are non similar to yesteryear ones.  That requires a proper historical view.

When traders assume that a work exists without a sufficient historical analysis, they run the adventure of tinkering with methods that operate as well as making those methods worse.  This is really truthful when traders laid out to merchandise systems.  They acquire discouraged when the arrangement has a (normal as well as expectable) drawdown, thence they laid out to alter the system, front end run the system, etc.--only to plow the setbacks into protracted slumps.

Sometimes traders are taking likewise much risk--trading seat sizes likewise large for their actual loss tolerance--and those strings of expectable losing trades create a "risk of ruin" situation.  In such a case, the trader tin give the axe human face at hitting rates as well as average win/loss statistics as well as create upward one's heed whether the work is inwards adventure taking or if the actual surgery of the trading methods has changed.

All of this is a rigid declaration for keeping detailed surgery metrics on your trading.  Only yesteryear comparison recent surgery to yesteryear surgery tin give the axe yous sympathise if yous really are improving inwards your trading or having an actual problem.  If you're a commencement trader, as well as then yous would compare your recent returns to the returns yous achieved inwards simulation mode.  (For to a greater extent than on trading metrics, regard this post; also this post.  H5N1 detailed handling of trading metrics tin give the axe survive flora inwards Chapter 8 of The Daily Trading Coach). 

Question #2:  If in that location is a work present, is it associated with a alter inwards the market(s) you're trading?

My firstly hypothesis when I run across a trading work (my ain or that of an experienced trader) is that the work has occurred for a reason, as well as that argue is related to a alter inwards how markets receive got been trading.  Because of those changes, the methods that had been working no longer ascendance the same edge.  

A swell instance of this has been the recent turn down of volatility inwards the stock market.  Many, many traders who made coin from momentum as well as tendency trading receive got suffered during this depression volatility menstruum because moves no longer extend and, indeed, tend to reverse.  That, inwards turn, leads to frustration as well as discouragement.

The key tell for when trading problems are related to changes inwards markets is that people trading similar strategies are also experiencing surgery difficulties.  This is ane argue it's of import to receive got a broad network of trading colleagues, fifty-fifty if yous merchandise independently.  If the swell bulk of traders trading similar styles are also experiencing drawdowns, yous tin give the axe safely assume that non everyone has turned into an emotional handbasket instance at the same time.  

Performance indexes for diverse hedge fund as well as CTA strategies are available from manufacture sources as well as tin give the axe attention seat when certainly approaches are winning as well as losing.  For example, the Barclay's curt term trading index (STTI on Bloomberg) tracks the returns of professional person coin managers trading curt term momentum as well as trends.  The surgery of those managers over the yesteryear twelvemonth or 2 has been dismal, ane time again related to the collapsed volatility of markets inwards the wake of depression involvement rates approximately the globe.  

If your trading problems are widely shared as well as tin give the axe survive linked to shifts inwards how your markets receive got been trading, no psychological exercises inwards as well as of themselves volition solve the problem.  Nor is it a solution to seat one's caput inwards the sand as well as promise that markets volition "turn around".  Rather, the respond to the trading problems is to adapt to the novel surround as well as search for fresh sources of border that tin give the axe complement one's traditional trading.  For example, ane mightiness detect hateful reversion or relative value strategies that nicely complement one's directional/trend/momentum trading.  The combination of trading approaches really diversifies returns as well as produces a smoother P/L curve.  (See Trading Psychology 2.0 for a detailed presentation of adapting to changing markets).

Question #3:  If in that location is a personal work present, is it--or has it been--present inwards non-trading parts of your life?

Here is a very, really of import issue.  Many personal issues, such equally anxiety, anger, depression, attending deficits, as well as impulsivity, exhibit upward inwards trading, but non solely inside trading.  For example, a mortal mightiness receive got problem with patience as well as frustration inwards personal relationships, as well as those same problems crop upward inwards his human relationship with markets.  Similarly, a mortal mightiness receive got self-esteem problems inwards life that as well as then exhibit upward equally negative thinking patterns during periods of marketplace losses.  When the emotional patterns, thought patterns, as well as behaviour patterns that interfere with trading are also occurring as well as interfering with other aspects of life, that is a rigid indication that exactly working on trading volition non survive sufficient.  It makes feel to seek professional person help.

The swell bulk of psychological challenges tin give the axe survive dealt with via short-term approaches to counseling as well as therapy.  Research suggests that problems such equally human relationship difficulties, depression, anxiety, as well as anger tin give the axe do goodness significantly from cognitive, behavioral, psychodynamic, interpersonal, as well as solution-focused approaches. (A thorough review of enquiry as well as do inwards this expanse tin give the axe survive flora in the textbook that I receive got co-edited.  H5N1 novel edition volition survive coming out belatedly this year).  The key to brief approaches to therapy is that they are highly targeted as well as brand active usage of exercises as well as experiences during as well as betwixt sessions.  

In situations inwards which the psychological problems receive got been longstanding, when in that location has been a seat unit of measurement history of similar problems, when those problems receive got been severe (significantly impairing of import areas of life), as well as when those problems receive got been complex (impacting many areas of life, equally inwards drug or alcohol abuse), longer-term approaches to helping are mostly indicated.  Attempting short-term approaches to attention for to a greater extent than important problems runs the adventure of relapse.  When problems receive got been longer standing, severe, as well as complex, it frequently is the instance that to a greater extent than than ane shape of attention is required, such equally medication attention inwards improver to therapy or grouping sessions (as inwards A.A.) inwards improver to counseling.  In such instances, it is really helpful to receive got a thorough assessment from a qualified mental wellness professional.  If in that location is meaningful depression and/or anxiety, a workup from an experienced psychiatrist is helpful, equally rubber as well as non-habit forming medications frequently tin give the axe play an of import usage inwards addressing the problems.

Depression, anxiety, attending deficits, addictions, bipolar disorder, human relationship problems--these impact a high percent of people inwards the full general population.  Traders are non exempt from these full general problems.  Assuming that an emotional number impacting trading is necessarily a trading number may forbid yous from getting the right sort of help.  No amount of writing inwards a trading periodical volition rebalance neurotransmitters inwards your encephalon or solve the conflicts yous pick out to your marriage.  When yous regard the problems affecting your trading also affecting other areas of your life, it's a rigid indication that a to a greater extent than full general approach to alter volition survive needed.

Question #4:  If the work you're facing occurs uniquely inwards trading settings, do yous demand psychological coaching or do yous demand farther mentoring of your trading?

Here ane time again is an of import distinction.  Especially for newer traders, frustrations as well as other emotional problems arise inwards trading exactly because they are soundless immature on their learning curves.  What they demand is non exactly emotional coaching, but guidance from experienced mentors who tin give the axe attention them right trading errors as well as to a greater extent than consistently apply trading skills.  Even experienced traders tin give the axe run across drawdowns as well as frustrations because they are making trading mistakes that a mentor tin give the axe choice up.  I late worked with a trader who was really discouraged because of a drawdown that occurred exactly because he was non closely monitoring correlations with his positions.  What he thought were several independent trades turned out to survive versions of the same merchandise ane time the primal banking concern indicated a possible policy shift.  He lost coin because he was likewise concentrated inwards that one, converged trade.

This is yet some other argue why it's really helpful to survive connected to networks of peer traders.  Many times such relationships offering usual mentoring that tin give the axe address situational problems as well as mistakes inwards trading. 

When drawdowns as well as disruptions of trading are to a greater extent than psychological as well as situational, several psychological approaches tin give the axe survive helpful, including behavioral methods (exposure therapy) for anxiety as well as surgery pressure; cognitive restructuring techniques for perfectionism, overconfidence, as well as negative thought patterns; as well as solution-focused approaches to seat as well as expand one's ain best practices.  (Specific applications of these methods tin give the axe survive flora inwards The Daily Trading Coach; the creation of best practices is a major theme inside Trading Psychology 2.0; an overview of cognitive as well as behavioral techniques for improving trading surgery tin give the axe survive flora inwards Enhancing Trader Performance).

Behavioral techniques are skills-building methods that yous do inwards existent time, during work situations.  You literally are didactics yourself novel skills as well as novel habit patterns.  For example, a really unproblematic behavioral technique would survive to accept a interruption during trading whenever yous experience anxious, frustrated, bored, or discouraged.  You rapidly recognize that you're non inwards the right mindset for trading as well as yous accept a interruption from the screens.  During that break, yous mightiness engage inwards other skills-building activities, such equally relaxation preparation to irksome oneself downwards as well as cut tension.  Behavioral methods are typically skillful exterior of trading hours thence that the skills acquire automatic inwards existent time, when problems crop up.  

Cognitive restructuring methods are techniques that yous usage to seat as well as challenge patterns of negative thinking that tin give the axe distort your emotions as well as interfere with audio conclusion making.  Many traders, for example, acquire highly self-critical when they lady friend a merchandise or when they accept a loss.  This tin give the axe interfere with their focus on the adjacent opportunities.  In cognitive restructuring, keeping a periodical helps the trader acquire to a greater extent than aware of his or her thinking as well as challenge that thinking when it's harsh as well as negative--or when it's overconfident!  

Solution focused techniques are ones that examine what yous are doing during your best trading, both inwards price of trading practices/processes as well as psychological self-management.  The finish of solution focused operate is to "do to a greater extent than of what works" as well as acquire to a greater extent than consistent thence that best practices tin give the axe plow into repeatable best processes.  Trading Psychology 2.0 contains 57 best practices contributed yesteryear myself as well as other traders; the chapter on Building Strengths also embraces a solution-focused approach to identifying what yous do best as well as edifice your trading approximately it.

The bottom work is that how yous operate on your trading should reverberate the diagnosis yous brand of your trading challenges.  Sometimes nosotros run across challenges because of tricky markets; sometimes because of our psychology; as well as sometimes those challenges are exactly a normal business office of adventure as well as dubiety inwards markets.  In this post, in that location are quite a few ideas tossed out.  For to a greater extent than information on those, yous tin give the axe exactly Google the relevant theme yesteryear entering "Traderfeed" as well as the theme of interest.  Thus, locomote inwards into the search engine "Traderfeed solution focused" as well as you'll regard quite a few posts relevant to that topic.  If yous desire fifty-fifty to a greater extent than depth as well as detail, the to a higher seat bulk references volition survive useful.

In an upcoming serial of posts, I volition seat xx top challenges that traders confront as well as highlight specific approaches to operate on each of those.  Yet some other serial volition human face to a greater extent than into exceptional into evidence-based techniques that attention traders as well as when to usage those.  All of this is business office of a grander conception to eventually link all the posts into a free, user-friendly, comprehensive online encyclopedia of trading psychology.  

Thanks, equally always, for your involvement as well as support--

Brett

Info!! Book Inwards The Stock Index Futures Marketplace - Business Office Two

my recent post, I suggested that a fundamental to agreement the graphic symbol of a marketplace hateful solar daytime was tracking the book patterns inside that day. Specifically, if book is running significantly higher upwards normal, it agency that institutional participants are active inwards the marketplace. This tends to pick out greater toll volatility together with increased likelihood of breakout together with trending moves--especially when nosotros run into similar moves inwards related markets (interest rates, currencies, commodities, etc.).

The nautical chart higher upwards is quite informative. It goes dorsum 24 trading days (to the commencement hateful solar daytime when the June ES futures contract became the forepart month) together with identifies the median book together with high-low toll hit (in per centum change) for each 15-minute menstruum through the day. We tin clearly run into the grinning designing inwards the data: the style for early on forenoon together with belatedly afternoon periods to merchandise alongside greater book together with toll movements than periods midday. Indeed, toll campaign early on together with belatedly inwards the hateful solar daytime is easily 50-70% greater than midday. This suggests that uniform rules for placement of stops together with toll targets are jump to fail: the marketplace is non uniform intraday.

Nor is the marketplace uniform from hateful solar daytime to day. These are median values, simply the values for each private hateful solar daytime vary widely. Wednesday's merchandise was a peachy example: about 15-minute periods during the hateful solar daytime traded at near-median book together with fifty-fifty lower than median toll movement. Other periods were greatly expanded from the norms charted. Those were the periods contributing to the day's trending movement. Institutional traders are non necessarily active inwards every fourth dimension period--they're non daytraders. But when nosotros run into that they are active at fundamental junctures (during toll breakouts, inwards answer to movements inwards rates or currencies), it underscores the significance of moves that hap every bit a result.

Below are the information for the chart. Note that the fourth dimension periods are USA Eastern time; fifteen-minute segments starting at the fourth dimension noted. I run these information to say me when book is running higher upwards together with below average and, hence, when I tin facial expression to a greater extent than or less toll movement. As mentioned earlier, this is invaluable inwards deciding when to accept profits aggressively vs. (as Wednesday) allow profits run.

Time	Volume	Range
9:30	107300	0.388
9:45	85008	0.342
10:00	91522	0.348
10:15	71411	0.314
10:30	81151	0.34
10:45	73599	0.315
11:00	60560	0.263
11:15	50261	0.296
11:30	53194	0.277
11:45	46481	0.242
12:00	35930	0.232
12:15	40276	0.235
12:30	39703	0.233
12:45	36437	0.24
13:00	38134	0.224
13:15	31076	0.193
13:30	39797	0.247
13:45	35313	0.19
14:00	47716	0.29
14:15	50910	0.248
14:30	50096	0.297
14:45	56285	0.344
15:00	57959	0.32
15:15	53862	0.33
15:30	68613	0.365
15:45	93226	0.311
16:00	71828	0.284

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Info!! Trading Notes: Calendar Week Of December 7Th

Friday, Dec 11th

*  We got a bounce inward yesterday's trade, entirely to autumn dorsum piece of cake inward the twenty-four hours together with motion dorsum to recent lows inward overnight activity.  I volition hold upward watching downside follow through closely inward early on merchandise today, peculiarly alongside honor to breadth, which--while negative--has improved over the yesteryear 2 trading sessions.  Yesterday nosotros saw 93 stocks brand fresh three-month novel highs together with 342 novel lows across all exchanges.  My bicycle measures are quite unopen to levels that need maintain been typical of intermediate-term marketplace position lows.  That has me careful virtually pounding the downside here.

*  While trader attending has been quite focused on fundamental banks inward Europe together with the U.S., nosotros proceed to consider odd weakness inward emerging markets together with oil.  It's a disconcertingly disinflationary merchandise together with I detect it hard to envision a longer-term flick of higher United States of America rates, higher United States of America dollar, together with higher United States of America stocks if that dynamic continues.  Note the toll taken on the high-yield bond market.  At to the lowest degree hence far, the Red People's Republic of China weakness dynamic seems to hold upward trumping the fundamental banking corporation stimulus dynamic.

*  Note that the VIX closed close 20 yesterday for the 2nd consecutive day.  The median VIX from Jan through July was virtually 14.  The median VIX since the laid about of August has been 17.  I am opened upward to the thought that 2016 could hold upward a higher volatility twelvemonth than 2015 given the to a higher house disinflationary dynamic together with its potential deport upon on global markets. 

Thursday, Dec 10th

*  We saw weakness overnight, hence morn forcefulness inward stocks, followed yesteryear pregnant selling pressure level together with novel toll lows for the latest motion lower.  Interestingly, however, nosotros saw fewer stocks register novel lows on the day.  For example, across all exchanges nosotros had 385 novel three-month lows compared alongside 601 the twenty-four hours previous.  Meanwhile, we're short-term oversold per the breadth nautical chart below, alongside fewer than 20% of SPX stocks trading to a higher house their three- together with five-day moving averages.  We've bounced overnight from the afternoon lows yesterday together with I'll hold upward watching breadth closely on whatever farther weakness.  Should nosotros instruct to intermediate-term oversold levels together with agree to a higher house the toll lows from mid-November, I would laid about looking for an halt of twelvemonth rally inward stocks.

*  We in 1 lawsuit once to a greater extent than saw real dissimilar toll activity yesterday during hours inward Asia, Europe, together with the U.S.  Assuming that toll moves inward 1 fourth dimension zone volition necessarily proceed into side yesteryear side ones has non been a smashing bet for short-term traders.  I detect the electrical flow surroundings to hold upward much amend to merchandise inside each fourth dimension zone, buying oversold levels together with selling overbought levels.  The nautical chart below tracks short-term rate-of-change where each menses represents 500 toll changes inward the ES futures.  This normalizes for overnight trading, exactly silent takes into trouble concern human relationship sweat overnight.

Wednesday, Dec 9th

*  We proceed to locomote off the overbought status per yesterday's post, exactly my intermediate-term bicycle measures are non yet inward oversold territory that has corresponded alongside recent marketplace position lows.  Meanwhile, breadth continues to deteriorate.  Across all exchanges yesterday, nosotros had 21 stocks brand fresh annual highs together with 252 register 52-week lows.  This is to a greater extent than novel lows than nosotros saw at the mid-November marketplace position bottom.  In all, this looks similar a weakening market, non a strengthening one.

*  No uncertainty contributing to the weakness is the odd weakness inward the high-yield bond market.  See the weekly nautical chart of JNK below.  With release energy prices continuing to fall, in that location are increased risks of bond defaults amid petroleum producers.  It is hard to foursquare that dynamic alongside a bull marketplace position thesis.

*  Given the commodity weakness together with heightened prospects for bond defaults, it's non surprising that much of the weakness amid stocks this yesteryear calendar month has come upward from raw materials shares per the graphic below from FinViz.  Even alongside fundamental banking corporation ease roughly the world, deflationary pressures globally need maintain non abated.

Tuesday, Dec 8th

*  I'm watching book carefully every bit the twelvemonth winds down.  It would non surprise me to consider traders pack it inward early on this year, given depression liquidity together with the challenges of P/L.  Tracking book intraday has been real helpful inward gauging how far marketplace position moves tin terminate extend.

*  We proceed to locomote off an overbought status (see below), alongside entirely pocket-size losses inward large caps exactly greater weakness amid smaller caps.  That weakness has contributed to overall weak readings alongside honor to the number of stocks making novel highs vs. lows.  For example, nosotros had 194 stocks across all exchanges brand fresh 3-month highs yesterday against 546 novel lows.  That number of novel lows was the weakest reading since early on October.

*  If I had to need a surprise for stocks inward 2016, it would hold upward that involvement charge per unit of measurement sensitive issues grab a bid, shrugging off whatever hike from the Fed together with focusing instead on the (modest) path of charge per unit of measurement increases going forward.  It is increasingly clear that this volition hold upward an abnormal hiking cycle.

Monday, Dec 7th

*  Here's what I consider amid talented traders who can't seem to brand their trading their career.

*  We've moved rapidly from oversold to overbought on my short-term measure, which is a 50-period charge per unit of measurement of alter measure, where each menses is defined every bit 50,000 ES contracts traded.  (See below).  It's non odd to consider some upside follow through subsequently such a thrust, hence I'm flexible inward trading today's session. 

*  One agency I similar to remain flexible is yesteryear going alongside statistics that I've gathered that detect that the bulk of trading days either seat inward their highs or lows for the twenty-four hours during the commencement sixty minutes of trade.  By watching early on flows, including uptick/downtick values, I tin terminate instruct a feel for whether we've made a probable high or depression for the twenty-four hours together with merchandise the ease of the session accordingly.  

*  The weakness inward petroleum prices inward the wake of the OPEC coming together has implications for release energy shares, commodity currencies, together with economical strength/weakness of diverse countries.  Ultimately it is hard to reconcile commodity weakness alongside growth perspectives leading the Fed to probable hike this month.  Some interesting views need maintain popped upward lately regarding the possibilities of 2016 recession.  If that scenario is to hold, nosotros should consider piddling follow through to Friday's rally inward stocks.

Info!! The Challenge Of Cultivating Trading Intuition

If nosotros are to ground our investment as well as trading decisions inwards audio agreement as well as prediction, what, then, is the role of intuition inwards decision-making?

The recent post service on intuition began alongside an interesting quote from Einstein, inwards which he described the rational heed every bit a faithful retainer as well as the intuitive heed every bit a sacred gift.  Indeed, to those who accomplish creative insights, it does indeed seem every bit though those flashes of insight come upwards from an other-worldly source.

The employment inwards fiscal markets is that thus many participants lack both faithful servants as well as sacred gifts.  I accept met many traders who claimed an border inwards markets due to their superior ideas and/or their superior gut experience for markets.  In the bulk of cases, it is hard to position a concrete procedure that would generate either superior insights or intuitions.  Too often, the ideas traded are casually derived as well as held yesteryear a consensus of participants.  What passes for gut experience is fraught alongside recency bias, overconfidence, as well as a host of other cognitive distortions.  

If I claimed to live a corking sprinter but never won a race as well as could non demonstrate superior running times on the track, y'all mightiness mean value me to live delusional.  Many traders, facing years of hapless results, volition brand comparable claims.  When pressed to position the root of their (seemingly hidden) talent, they oft volition scream intuition as well as a superior marketplace feel.  If exclusively situational forces--psychological ones, the evils of algorithmic marketplace manipulators--could live tamed, they maintain, their talents would lastly polish through.

Suppose nosotros encountered an isle tribe inwards which the natives looked to the shapes of passing clouds for clues every bit to their destiny.  Dark clouds foretold an ominous future; a cloudless heaven suggested a sunny path ahead.  We would no uncertainty chalk upwards these practices every bit the superstitious beliefs of a primitive culture.  Now imagine nosotros encountered a tribe of fiscal participants who await to ancient numerical sequences or shapes on charts for signs of the futurity of property prices.  This nosotros chalk upwards to "technical analysis" as well as house on the plan of expo events.

I accept never felt a detail wish for psychedelic drugs as well as other mind-altering substances.  Reality itself is weird enough.

And soundless in that location is far to a greater extent than to intuition than superstition as well as cognitive bias.  Some of the well-nigh successful traders I've known accept demonstrated--year afterward year, over thousands of trades--a superior powerfulness to read short-term patterns inwards markets.  What sets these intuitive traders apart from those who are exactly deluded?  Where produce they larn their sacred gift?

Let's consider an analogy.  Suppose I identified a someone who had a superior intuitive powerfulness to forecast the weather.  This someone could say when it was going to rain, when temperatures would larn cooler, as well as when a tempest was approaching--all alongside well-above peril levels of success.  If nosotros were to dissect the success of our forecaster, nosotros would discovery out that he or she had developed a experience for factors that genuinely are related to conditions changes:  shifts inwards air current velocity, shifts inwards air pressure, changes inwards humidity, etc.  In other words, the intuition is grounded inwards pattern recognition, as well as the pattern recognition is grounded inwards variables that are objectively related to the intuited outcomes.

Compare this alongside a would-be conditions forecaster who based predictions upon a preordained laid of moving ridge patterns linking temperatures as well as precipitation.  

I've had the award of watching several skilled intuitive traders inwards the procedure of their trading.  To a person, they focus on marketplace factors that (perhaps unbeknownst to them) accept been extensively studied as well as documented inwards the academic finance inquiry literature:  factors such every bit momentum as well as volatility.  They are similar the skilled conditions forecaster:  they accept developed a sensitivity to changes inwards the environs as well as the correlation of those changes alongside futurity outcomes.  Their sacred gift is the resultant of experiencing thus many situations that pattern recognition becomes their faithful servant.

As a psychologist for over xxx years, I accept many intuitive insights into the people I operate with.  I produce non accept intuitive insights into H2O ice skating or plasma physics.  Intuition comes from experience--but it has to live the correct experience.  Years of exposure to random inputs volition non convey sacred gifts.  Intuitions are exclusively valid if pattern recognition captures variables that genuinely are causally related to anticipated outcomes.

If this is true, much of traditional trader instruction is misguided.  To gear upwards a trader's intuition, nosotros should expose the developing trader to genuinely predictive variables as well as their co-occurrence across many marketplace situations.  Simple toll as well as book charts or depth of marketplace displays are ill-designed for this purpose.  If the variables that are well-nigh predictive are ones similar momentum, correlation, as well as sentiment, thus nosotros postulate to prepare displays that capture how momentum, correlation as well as stance acquit nether a diversity of marketplace conditions.  It's non that toll charts are wholly unrelated to these things; it's that if nosotros wanted the clearest as well as to the lowest degree ambiguous displays of the well-nigh predictive variables, nosotros would non rely upon a toll chart. 

Intuition tin live a controversial topic.  On i mitt y'all accept advocates of intuition who claim a mystical root for their insights.  On the other hand, y'all accept rationalists who deny the validity of intuition altogether.  There is a scientific discipline to cultivating intuition, but I suspect it's inwards its infancy.  We tin exclusively prepare a valid experience for things if nosotros are systematically exposed to things of demonstrable validity.  The recent posts on identifying drivers of short-term markets is but the outset pace inwards a larger developmental endeavor to cultivate sacred gifts from faithful servitude. 

Further Reading: Underconfidence as well as Overconfidence inwards Trading
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