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Strategies & Market Trends : Trading Notes, An Archive -- Ignore unavailable to you. Want to Upgrade?

To: Susan G who wrote (110)	9/25/2002 12:11:06 AM
From: Susan G	Respond to of 121

Numerate Trading Every trader has heard about or learned at some point in his career that emotional control is critical during the process of making trading and investment decisions. Few traders, however, understand that when your psychology is at a point where you have to exert some sort of control or constraint on your emotions, you're already in a losing predicament. One of the most easily identifiable characteristics of successful and experienced traders is that they're numerate when it comes to their trading activity. This means that they think in terms of numbers, statistics, and probabilities, and have mastered the art of being emotionless when making trading or investing decisions. Achieving a numerate attitude or approach to your trading will prevent you from having to go through the emotional experiences you're likely to otherwise experience and struggle with. Part of the difficulty in adopting such an approach is in understanding how to maintain your intuition and "feel" of the markets while also maintaining a very calculated mental attitude. There is a big difference between utilizing your intuition and feel of the markets and being swayed by emotions, such as fear, greed, hope, etc. A numerate approach is not compatible with any emotional approach or attitude. In other words, if you're being truly numerate, it will not be possible (by definition) to simultaneously experience fear or greed or hope, and vice versa. On the other hand, you can still use your "intuition" or "feel" of the markets by drawing on past experiences you gained while having a numerate perspective. Your "intuition" or "feel" of the markets in these cases is merely your understanding and interpretation of your experiences, free of emotional biases. Most traders have difficulty adjusting to a numerate mindset, mostly because they've been accustomed to thinking and acting emotionally all their lives, but it's critical to do this in order to be able to make objective decisions. One of the best ways to begin thinking in numerate terms is to go through the exercise of trying to put what those around you are saying in numerate terms. Consider and commit to your memory only facts, as if you were to create a historical timeline. You can and should include information about sentiment that you may observe, but only if you can support your opinion with facts. Achieving the ability to think in numerate terms takes time, but will be invaluable to your trading success. from innerworth.com