- Curious about how we look at the markets? Check out our video on the Dynamics of Our Trading Thought Process
A THEORY OF SHORT-TERM TRADING
Short-term trading is a uniquely challenging learning experience due to constantly changing data and results influenced by endlessly diverse factors. It’s difficult to teach because there are myriad approaches, each with unique, multidimensional factors to consider. While your trading style will mold to your personality, you can enhance your odds of satisfaction by understanding other points of views and their associated psychologies. We teach two approaches: “fast trading” for quick information processers, and “slow trading” for those who tend to be more calculating. These philosophies are influenced by Daniel Kahneman’s excellent book, “Thinking, Fast and Slow”
TRADING, FAST AND SLOW
There is no bridge between the trading language of the past and the future. There are, however, innovative concepts and market-generated information that we teach, including excess, balance, weak highs and lows, excess highs and lows, afternoon pullback lows and rally highs, the continuous two-way auction process, inventory, migrating POCs (fairest price at which business is being conducted), the dispersion model, emotional intelligence, value, value-area development, and “chunking”—essentially mental routines. We cover each of these topics in depth in our course materials.
CHUNKING: PRODUCTIVE TRADING ROUTINES
Conscious thought is inefficient when fast action is required. If a quarterback had to stop and think about what to do after the snap, he would be helpless before the onslaught. Conscious processing is magnitudes slower than “chunking,” when we perform well-known routines like backing the car out of the garage. Chunking is learned one step at time—but if we are asked to list every step in a routine, we’ll likely stumble. Much of our educational efforts are focused on helping you develop “chunks” that enable effective, repeatable trading routines.
THREE IMPORTANT STEPS
- Introduction: Foundational knowledge of market-generated information.
- Mentoring: Guidance to keep you on track, moving in a productive direction.
- Repetition with variation: No two markets are exactly the same, but with experience you can make vital adjustments that keep you in the game.
PERFECT PRACTICE MAKES PERFECT
Practice is the intuitive portion of the brain etching actionable new networks. These patterns combine with the context of everything else we know to form routines—chunks. Like parking a car, we focus on the total experience rather than each individual step to complete the task.
Routines and chunking prepare us to think—and act—in terms of odds. This preparation allows us to extrapolate the behavior of our competitors in order to assess risk. This becomes your edge, which quickens your reaction time, sharpens your tactical awareness, and helps you assess the strength or weakness of your competition. If you understand the odds, you have a better chance of making the right call when the pressure is on. Sometimes that call will support the competition while at times leading you to fade them.
FRUSTRATION, REPETITION, VARIATION
When you begin our trading education, we recommend that you go slowly, gradually increasing your learning speed as you begin to master new ways of thinking about data, performance, and odds. Speed without deliberateness usually delivers negative results. Going slowly allows you to grasp each piece of information and incorporate it into your subconscious, so your mental arsenal of actionable chunks grows over time. It’s a hard fact for some to accept, but it is only those traders with a well-developed sense of emotional intelligence who have the patience to proceed slowly.
All of our educational endeavors are based on repetition with variation; each element you learn connects with every other element to form an increasingly sophisticated understanding of the factors that influence real-time market activity. The only way to become a master trader is one step at a time.
We’re ready when you are…