January 18th, 2014
Hi everyone,
Comment From member:
L
et’s continue our discussion about Mark
Douglas’ excellent book Trading in the
Zone. Last week we talked about “Aligning
Your Mental Environment” and today I will
continue with “The Dynamics of Perception.”
Jane, could you describe why one might be
interested in trading the ETF Portfolio
instead of a Retirement one?
Answer:
Very good question Jason and maybe a
good subject for a blog article. Here is
One of the primary objectives of these weekly
what Investopedia says, "It was State
sessions with your local trading psychologist
Street Global Advisors that launched the
(LOL) is to teach you how to make market
first exchange-traded fund(ETF) in 1993
information neutral, how to look at market data
from the markets perspective, how to trade like an
algorithm.
with the introduction of the SPDR. Since
then, ETFs have continued to grow in
popularity and gather assets at a rapid
pace. The easiest way to understand ETFs
is to think of them as mutual funds that
Mental Framework
trade like stocks. Of course, trading like a
stock is just one of the many features that
I
t's our own mental framework that controls how
make ETFs so popular, particularly with
you identify the information, how you feel, and,
professional investors and individual
as a result, whether or not you are in the most
investors who are active traders."
conducive state of mind to spontaneously enter
the flow and take advantage of whatever the market is offering.
Algorithms don't distinguish anything about the markets as painful, therefore, they don’t
perceive any threat exists. That's why algorithms can see and signal trades that baffle us.
How many times have you encountered a QiT signal, looked at the chart and said, “There
is no way I would buy that stock.“ Algorithms never second guess an opportunity so are
always in the flow, 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 you into emotional
pain.
Debug Your Mental Software
T
he process of trading starts with perceiving an opportunity. Without the perception
of an opportunity, we wouldn't have a reason to trade. For example you get a QiT
signal, which represents an opportunity. Unfortunately, you pull up the chart and
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 put on the trade.
What mental energy is swirling around getting in the way of trading like an algorithm?
What are the underlying dynamics of your perception of it? What factors determine how
we perceive information and how perception is
connected with what we experience at any given
moment?
Everything that exists outside of our bodies, or to be
more specific, whatever we are seeing, hearing,
tasting, smelling, or feeling through our senses gets
transformed into electrical impulses of energy and
stored in our mental environment as a memory. 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.
Cause and Effect Relationship
ere is what Douglas says about this relationship, “there's a cause-and-effect
H
relationship that exists between ourselves and everything else that exists in the
external environment. As a result, our encounters with external forces create
what I am going to call "energy structures" inside our minds. The memories, distinctions,
and, ultimately, the beliefs we acquire throughout our lives exist in our mental
environment in the form of structured energy… thoughts are energy.” What Douglas is
saying is if the memories and beliefs we've picked up as a result of our encounters with
the external environment represent what we've learned about that environment and how
it works; and if these memories and beliefs exist in our mental environment as energy;
and if energy doesn't take up any space; then it also could be said that we have an
unlimited capacity for learning. If you consider the development of human consciousness
and what we need know to function effectively today compared to just 100 years ago,
there is absolutely nothing to indicate that we don't have an unlimited capacity to learn.
The difference between what we are aware of now and what we can do as a result of this
expanded awareness would boggle the mind of anyone living 100 years ago.
Next week, “Perception and Learning.”
In Conclusion ….

And once again

Do you believe Gold will

It's been more than three years since the S&P500 has dropped 10 percent or more.
Is it ready for a
?

Since cars can talk to each other, we can manage the traffic control at intersections
without

Fear is a factor for many investors who have suffered through two stock-market
crashes since 2000. After the recent financial crisis, many investors dumped their
stocks and “missed the next four years of a bull run,” says Schock of the SEC.

If con is the opposite of pro, then is Congress the opposite of progress?
is up.
Make sure you check out the
on our homepage.
Remember, plan your trade and trade your plan.
TraderJanie
If you no longer want to receive these emails, please respond to this email and put UNSUBSCRIBE in the subject line.