Trading Insights

Trading Insights

Trading Psychology and time cycles

Trading Insights
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Trading psychology fascinates me. On the surface, it appears to be the simplest thing to do. See this signal - do this do that, right? But any veteran day trader will tell you - if they're honest - that there's inexorably more to trading the futures, forex, commodities, and equities markets than just seeing a signal and hitting a button.

One of the struggles that I see most new traders dealing with circulate around trading psychology, and over trading - where traders sit at their trading computers hovering over every bar and every tick supposing that they are microseconds away from missing the move of the day. They as a result begin to trade over and over and over again - anticipating moves that never materialize.

Having struggled with this trading malady myself - and being a student of trading psychology, I was fascinated to find this recently released quote from a New York Times article:

"...In its (very long) explanation of this phenomenon (Decision Fatigue), the Times reports that experiments have demonstrated a "finite store of mental energy for exerting self-control." Each decision you make and the more choices you make throughout the day, the harder it gets for your brain to continue to make decisions. The result is that towards the end of the day when you're low on mental energy, you're more likely to either give in to impulses or avoid making decisions altogether..."

No one has ever to my knowledge put the phrase "decision fatigue" into the trading psychology arena. And yet - when we read the above statement, we know existentially of its truth. How many traders have made thousands in the morning sessions, only to give it back plus some in the afternoon? (We should all be nodding our heads if we're honest about the truths of trading psychology).

Decision Fatigue studies like this one are powerful insights into our minds, our trading psychology, and how they affect our profitability as traders. As Jack Schwager put it in his book, "The New Market Wizards", "We has met the enemy, and it is us". Our minders show us how little we understand our minds - and our desperate need to fill that gap.

What I like most about trading the time cycles of the Flux is the appointment nature of the indicators. Time cycles and their studies allow you the mental freedom in trading psychology to take a break - and to plan your trades and setups. In between cycles, there is simply nothing to do but wait. To regroup. To refresh. There are no missed moves. There are only moves inbetween time cycles and time signals. Many traders say, "I know when to wake up at night, and when to sleep.", or, "I know when to get up from my desk and do something else, and when to be back to trade". These are important statements in light of trading psychology, and decision fatigue management.

I hope you'll take some time to study our time cycle indicators if you're not a customer, and if you are - that you'll continue drilling down deeper with your studies and your proficiency in this arena. Doing so is an investment in your trading psychology arsenal - I believe the most critical arena in trading altogether.