Logics Part 3: Consciousness

Discussion in 'Psychology' started by Lucias, Jul 3, 2011.

  1. Lucias


    Part of the underlying with the "Logics" was to make conscious the decision making process or the Logic that leads to decisions. If something conscious then we may reflect on it, examine it, and determine if it is worthwhile. This "bringing out process" is important for meta cognition. Dr. Win Wenger, an accelerated learning author, writes much to this "bringing out" or "drawing out" process. In this way, this topic is recognizing that the Logics was just one form of this. It wasn't explicitly stated that it was a bringing out process. I find this bringing out process to be very worthwhile and it is worth recognizing as a technique, as a methodology for deriving insight.

    One of the problems traders face or contend with is a desire for consistency. The hallmark of a job is consistency. Any regular work job, that's the underlying truth whether you're a programmer or a pickup the trash is you go to work everyday. This is the reason people desire freedom is because there isn't much freedom in any given job. The one connecting factor for the manager and the lowest payed worker is they both have to go to work most everyday. Interestingly enough, people trade for freedom but often schedule their trading in such way that is a job. They structure based on what they know and they believe. If you treat trading like a job then the one thing that you will do is go to work everyday.

    Interestingly enough, this desire to structure trading and approach trading in such a consistent way doesn't work for many types of trading strategies. And, you look at Paulson and his big short. This was a rare opportunity. Taleb's black swan funds or whatever they are: they aren't structured to make money like a "job". They are structured to make money from rare events.

    So, what's going on? One way to think about this is that anything relatively more valuable must be relatively more rare. Yet, if something is rare then it must be limited. If you are long during the best 20% of the time then you are out of the market the rest of the time.

    And, here it is made conscious that the desire to be in the market all the time, to treat the market like a job is against the scarcity principle that underlies and defines opportunity. And, it is also against strangely one of the primary reasons why people trade, which is that freedom from work.

    This doesn't mean that one can't day trade or even place multiple per day. Yet, it does indicate that there is an internal struggle. As a trader, you want to be consistent and making profits on a regular basis and yet logic dictates that you are constantly constrained.
  2. Lucias


    The Questioning

    I've written much to the effect of how does develop a method that is simple enough to be acted on and yet complex enough to accurately represent the market.

    This is probably one of the most important ideas that exist in trading. It is what separates the professional from the amateur. It is a big factor: no make that a huge factor.

    And, yet it is so not conscious that it is often ignored. I've written about the "attention-activation" model in another thread which is basically this idea that if I know where a trader's attention is spent, how much time he spends engaged in various activity then I have good chance of modeling his behavior. Without knowing when and how his attention focused then I'm disadvantaged in terms of copying this trader. I need to know how focused he is, when he is focused, and when is he not focused.

    But, I also need to know, in addition, is what we studied the night before. I need to know the subtle threads that are on his mind. The professional trader who may use technical analysis is rarely only using just that. He's formulated things in his mind and scenarios. He has gears turning.

    I'll be point blank that much of my profit and ability is recognizing when traders lose confidence. I can feel it. I use that to help to take advantageous trades or to get out of losing trades. Exactly how I do that is proprietary.

    One of the major problem areas that I see with novice traders is they aren't willing to accept and to deal with the market in all its gory. And, failure to appreciate the market in all its complexity often results in great fantasies, false narratives, and coping mechanisms. Best to look straight into the abyss. Stare it in its feral eye and wrestle with it.
  3. jfranco