Brett N. Stinberger - Doctor of Philosophy and Professor of Psychiatry at the Medical University in Syracuse, NY. New York. He is also an active trader and writes articles on market psychology. The author of the book "Psychology of Trade, 2003. Doctor Stinberger published over 50 articles on short-term approaches to behavioral change for traders.
Recently, an e-mail I received an excellent question, which has convinced me of my own work with the traders - Why do traders resist breakthroughs, trend movements, when they are so obvious? Again and again, I will see traders who refuse to enter the market, which breaks down, saying that the fact that "I do not want to sell at a minimum."
Worse, that traders will hold on to positions against the trend, because "the market should turn or manipulate the market."
Let's go back to basics:
The volume tells you when the traders and investors take the price at this time. If the market traded within a narrow range and then breaks up from the range at high volumes, this means that the market takes the price at higher levels. If you visited an art auction where they sold her painting, and a large number of applicants continued to offer higher prices for your picture, you would have concluded that the picture has not yet found its final selling price. You certainly would not have sold his picture as soon as the first group of applicants began offering its price!
The market operates on similar principles of the auction (see the excellent book by Jim Dalton "Mind over the market, which discusses the theory of auctions in the trade). Every day we see the auction for the "art" as the S & P, NASDAQ, shares of individual companies, etc. Dynamic interaction between buyers and sellers determine the price for these markets. That is, when we see that expanding a directional price movement, we realize that the market got out of balance. He will continue to move in his direction while he was not able to attract sufficient interest of buyers or sellers to establish a new equilibrium. Sometimes I ask the trader, who missed the movement of a breakthrough that occurred with the volume during this period? Very often the response I hear "I do not know." Trader was so busy focusing on price, and so busy focusing on their own reactions to the motion that the value of a breakthrough, based on the principle of the auction, has been lost.
I would argue that this is one of the irrefutable laws of commerce: when something important is happening in the market, traders focused on the good market and the significance of events. The bad traders focus on themselves and their problems on the fact that they missed the movement, as they were able to earn this money, etc. Incredible, but I saw how the whole trend traders missed days because they were busy that thwarted by the fact that the "missing movement" for the initial breakthrough.
However, there may be another reason to skip these obvious movements. Let me give you three different but related examples of "unwillingness to accept the obvious:
1) A woman complained about a lawyer in family problems.
Her husband was absent at night. He told her that worked late, but she could not catch him in the office. Once she has found some female thing in his car and asked him. He explained that she forgot that thing in the car when he dropped her home, went to the end of the day in the office. When counsel suggested that perhaps her husband's other woman, she blew up at a lawyer and insisted that she should just save your marriage. " A few weeks later, her husband left for another woman.
2) the patient suffering from cancer last, an incurable stage, and tests confirm the widespread dissemination of cancer. When the doctor raises the issue of placement in a foster home and possible ways to reduce pain in the final weeks of life, family members indignantly oppose him and insist that he applied a "more intensive treatment" so that he could return home and, ultimately, to return to work. In the meantime, the patient becomes worse and worse and he was clearly suffering from a very experienced pain.
3) The victim of violence as a child insists that her father cared about her, despite clear evidence that she was subjected to sexual harassment, physical abuse and frequent beatings. She insists that she must have done something wrong, that having him, and will not use the term "violence" to describe what she went through that. She is going through a period of depression, when, even now, she is drawn to him, only to be denied.
In all three cases, the difficulty in making the obvious is the result of the need to believe in something else. This happens not only because the person is blind in relation to reality, but also because of the desire to experience another reality. In most cases, when traders are not able to act on strong motion, or even worse, playing against them, a situation arises where the trader has to expect a different behavior of the market. As soon as it becomes part of their analysis, it becomes their opinion, and they become hostage to this view. In the language of traders, which means "to marry his or her opinion" or "the position to marry." I came to the conclusion that in order to avoid such a situation it may be useful for the formation of the market scenario, "that - if", which can then work out mentally. If the market range bound, then that would be if it will break above the range with an expanded volume? What if a small sector violated above their range, even if the overall market remained range? What if the market tests the upper limit of the range and scope of giving? Such a scenario "that - if you actively prevent the trader was not caught in the assumptions, which are opinions on which of the" married ". "Plan the trade and deal on the plan" - is the usual advice, but good traders always have a fallback plan.
Finally, let us consider the opposite scenario: the trader sees the market, which involves a range, and which persuades every move that is about to be a breakthrough. Once again there is a need to believe, but for another reason. Too seeking to act, and missing from the limited trade, the trader can not accept that the market find its equilibrium and remains there. Low volume also clearly said that, as the high only for those who wish to hear it. The market, which traded just a few hundred contracts in a minute, did not involve other parties and will be pushing back and forth only "local players". It is easy to exceed the mode of trade in these markets, expecting a breakthrough, rather than wait for evidence of their occurrence. Signal feature of this problem - it is part complaint traders that the market will not sell. " They are busy struggling with the fact that the market is doing, rather than follow what makes the market. Ian Rand was right - many of the problems boil down to avoid our needs, when the desire comes into conflict with reality.
Recently, an e-mail I received an excellent question, which has convinced me of my own work with the traders - Why do traders resist breakthroughs, trend movements, when they are so obvious? Again and again, I will see traders who refuse to enter the market, which breaks down, saying that the fact that "I do not want to sell at a minimum."
Worse, that traders will hold on to positions against the trend, because "the market should turn or manipulate the market."
Let's go back to basics:
The volume tells you when the traders and investors take the price at this time. If the market traded within a narrow range and then breaks up from the range at high volumes, this means that the market takes the price at higher levels. If you visited an art auction where they sold her painting, and a large number of applicants continued to offer higher prices for your picture, you would have concluded that the picture has not yet found its final selling price. You certainly would not have sold his picture as soon as the first group of applicants began offering its price!
The market operates on similar principles of the auction (see the excellent book by Jim Dalton "Mind over the market, which discusses the theory of auctions in the trade). Every day we see the auction for the "art" as the S & P, NASDAQ, shares of individual companies, etc. Dynamic interaction between buyers and sellers determine the price for these markets. That is, when we see that expanding a directional price movement, we realize that the market got out of balance. He will continue to move in his direction while he was not able to attract sufficient interest of buyers or sellers to establish a new equilibrium. Sometimes I ask the trader, who missed the movement of a breakthrough that occurred with the volume during this period? Very often the response I hear "I do not know." Trader was so busy focusing on price, and so busy focusing on their own reactions to the motion that the value of a breakthrough, based on the principle of the auction, has been lost.
I would argue that this is one of the irrefutable laws of commerce: when something important is happening in the market, traders focused on the good market and the significance of events. The bad traders focus on themselves and their problems on the fact that they missed the movement, as they were able to earn this money, etc. Incredible, but I saw how the whole trend traders missed days because they were busy that thwarted by the fact that the "missing movement" for the initial breakthrough.
However, there may be another reason to skip these obvious movements. Let me give you three different but related examples of "unwillingness to accept the obvious:
1) A woman complained about a lawyer in family problems.
Her husband was absent at night. He told her that worked late, but she could not catch him in the office. Once she has found some female thing in his car and asked him. He explained that she forgot that thing in the car when he dropped her home, went to the end of the day in the office. When counsel suggested that perhaps her husband's other woman, she blew up at a lawyer and insisted that she should just save your marriage. " A few weeks later, her husband left for another woman.
2) the patient suffering from cancer last, an incurable stage, and tests confirm the widespread dissemination of cancer. When the doctor raises the issue of placement in a foster home and possible ways to reduce pain in the final weeks of life, family members indignantly oppose him and insist that he applied a "more intensive treatment" so that he could return home and, ultimately, to return to work. In the meantime, the patient becomes worse and worse and he was clearly suffering from a very experienced pain.
3) The victim of violence as a child insists that her father cared about her, despite clear evidence that she was subjected to sexual harassment, physical abuse and frequent beatings. She insists that she must have done something wrong, that having him, and will not use the term "violence" to describe what she went through that. She is going through a period of depression, when, even now, she is drawn to him, only to be denied.
In all three cases, the difficulty in making the obvious is the result of the need to believe in something else. This happens not only because the person is blind in relation to reality, but also because of the desire to experience another reality. In most cases, when traders are not able to act on strong motion, or even worse, playing against them, a situation arises where the trader has to expect a different behavior of the market. As soon as it becomes part of their analysis, it becomes their opinion, and they become hostage to this view. In the language of traders, which means "to marry his or her opinion" or "the position to marry." I came to the conclusion that in order to avoid such a situation it may be useful for the formation of the market scenario, "that - if", which can then work out mentally. If the market range bound, then that would be if it will break above the range with an expanded volume? What if a small sector violated above their range, even if the overall market remained range? What if the market tests the upper limit of the range and scope of giving? Such a scenario "that - if you actively prevent the trader was not caught in the assumptions, which are opinions on which of the" married ". "Plan the trade and deal on the plan" - is the usual advice, but good traders always have a fallback plan.
Finally, let us consider the opposite scenario: the trader sees the market, which involves a range, and which persuades every move that is about to be a breakthrough. Once again there is a need to believe, but for another reason. Too seeking to act, and missing from the limited trade, the trader can not accept that the market find its equilibrium and remains there. Low volume also clearly said that, as the high only for those who wish to hear it. The market, which traded just a few hundred contracts in a minute, did not involve other parties and will be pushing back and forth only "local players". It is easy to exceed the mode of trade in these markets, expecting a breakthrough, rather than wait for evidence of their occurrence. Signal feature of this problem - it is part complaint traders that the market will not sell. " They are busy struggling with the fact that the market is doing, rather than follow what makes the market. Ian Rand was right - many of the problems boil down to avoid our needs, when the desire comes into conflict with reality.
Forex Magazine
based on www.brettsteenbarger.com
based on www.brettsteenbarger.com
No comments:
Post a Comment