One of the most mutual mistakes traders brand is that they desire to produce novel things–find fresh opportunities, modify the agency they contend trades or themselves–while retaining their existing ways of seeing the world. If nosotros await at the footing through the same lenses, we’ll pretty much come across the same things too response inwards the commons ways. New doing requires fresh viewing–the might to wearable a unlike laid of lenses.
I was pleased to come across that my new book, Trading Psychology 2.0, is in conclusion available. I gave the mass that advert to select an of import theme: recent query inwards psychology has moved us a long agency inwards recent years, challenging our traditional ways of thinking close the psychology of trading. In other words, recent run inwards psychology provides a novel laid of lenses that allows us to sentiment our trading–and our increase equally traders–in a fresh light.
Margie too I late spent an eventide too morn inwards Tusayan, AZ, only exterior the Grand Canyon. We visited the Canyon unopen to sunset too thence 1 time again unopen to sunrise (see above). The lite on the rocks too canyon was completely unlike at the ii times. What you lot saw inwards the evening–the textures, colors, too details–was radically altered inwards the morn light. It was similar viewing ii psyche paintings of the same subject.
Notice how the procedure of visiting the Canyon at sunrise too sunset is rattling unlike from the tourist’s procedure of coming to the site at a random fourth dimension of day, taking a await at the big canyon, snapping a few pictures, too thence going on for the residuum of their trip.
Most traders approach markets the agency the average tourist visits the Grand Canyon.
What the novel psychology teaches us is ways of seeing markets at sunrise too sunset–in 1 light, too thence a rattling unlike light. That is how nosotros brand it at fresh insights; that is how nosotros come across things that others miss.
One laid of charts that I proceed examines cost levels–and rates of changes of those levels–at unlike fourth dimension intervals. Another laid of charts I proceed examines volatility readings–and changes inwards those–at unlike fourth dimension intervals. One laid of cost too volatility charts is denominated inwards cost modify units–each “bar” represents a given total of effort inwards the asset, non a fixed fourth dimension period. Another laid of cost too volatility charts is denominated inwards mass units, where each “bar” is drawn later a fixed total of contracts trade.
The opportunities be at the intersection of those iv sets of charts, where cost modify too volatility patterns line of piece of employment up. If I sentiment markets equally a tourist, looking alone at time-based cost charts, I never come across the intersections. The tourist who comes to the Canyon at noon never sees the Canyon at sunrise or sunset–and tin flame never appreciate the changes betwixt the two. The tourist who looks at markets 1 agency cannot come across the opportunities that saltation from a fresh laid of perspectives.
An of import takeaway from Trading Psychology 2.0 is that nosotros can’t psyche markets spell we’re stuck inwards our ain 1.0 version of trading psychology. Only past times viewing ourselves too markets inwards novel ways tin flame nosotros laid ourselves upward to produce novel things. There is no border inwards consensus perception.
Further Reading: The Most Important Trading Trait