One of the primary objectives of these weekly sessions with your in-house trading psychologist – what you didn’t know I was a trading psychologist? – is to teach you how to make market information neutral, how to look at market data from the market’s perspective, how to Become the algorithm.
I can just hear the conversation now:
Mom: Jane what are you going to be when you grow up?
Jane: So glad you asked Mom, I’ve decided to become an algorithm
It’s our mental framework that controls how we pigeonhole information, how we form impressions of it, and, as a result, whether or not we are in the most conducive state of mind to spontaneously enter the zone and take full advantage of everything the market offers.
Algorithms don’t make judgments about the markets. Algorithms do not feel pain. (They also won’t steal the leftover pizza you hid in the back of the fridge) Therefore; they don’t perceive any threat exists. That’s why algorithms can see and signal trades that baffle us. Trades make us shake our heads in wonder.
We have all encountered a QiT signal, looked at the chart and said, “There is no way in hell I would buy (or short) that stock?” (Come on I know you’ve all said that at least once).
Algorithms never second guess an opportunity so are always in the zone, because they’re able to perceive an endless stream of opportunities.
Your goal is to be able to trade like an algorithm and see the market from its perspective, without distortion and then react without resistance or hesitation. In essence, your objective is to be able to create a unique state of mind, a trader’s mentality, which is exactly the way an algorithm would trade.
But how do we do this?
First of all, we have to redefine your relationship to market information or, in other words, change our perspective and operate out of a mental framework that keeps you focused on the opportunities available instead of tapping into emotional pain.
Pulling the Trigger
The process of trading starts with perceiving an opportunity. Without the perception of an opportunity, we wouldn’t have a reason to trade. In our world, that opportunity is a nightly signal.
Unfortunately, each night many of us pull up a chart of the stock signaled and what happens? Your mental processes hijack your intentions, and you discover you cannot “pull the trigger” on the trade.
You’ve done your homework on the portfolio:
- you know the potential profits,
- the potential drawdowns,
- you understand the rules the trade is following,
yet you cannot “Pull the Trigger.”
What I am saying is if you find your emotions get hijacked and you have a hard time “Pulling the Trigger. ” Then you maybe want to hold off “peeking” until you develop the faith in the reliability of these algorithms. That faith will come with time.
What is getting in your way?
So what exactly is swirling around getting in the way of trading like an algorithm? The answer is everything! Everything that exists outside of our bodies. Or to be more specific, whatever we see, hear, taste, smell, or feel. It’s all transformed into electrical impulses of energy and stored in our mental environment, our mental software, as a memory. If it has a large enough impact on us, it becomes a belief. Although this may seem pretty obvious, there are some profound implications involved here that aren’t self-evident, and we typically take them completely for granted.
We’re the Plan in “Plan your Trade and Trade your Plan” – TraderJanie
“If awesome were inches, we’d be the Effiel Tower.”