How we decide

I am currently reading this book called how we decide by jonah lehrer. Fascinating book! He really dives into the biological functioning of our brains and the chemical processes that take place when we are making decisions. It has already made me think much differently about the decisions i make each and every day (especially in trading) and has also revealed to me the big fallacy of emotions being a negative and detrimental part of life that must be supressed at all costs. Anyway i will share much more on this fascinating book as i have more time to write and I am further along but just wanted to say that if you wanted a fascinating read, pick up How We Decide, you won't be dissapointed.

Trend Lines and Time Frames

I have thought a lot recently about the similarities between trading and life but two elements continue to run through my mind; pivot points and multiple time frames. In trading we like to view things from multiple time frames in order to see the different trends that the derivative is making. For example a five minute chart may show the stock is moving in an upwards direction but the 30 minute chart may show that in fact the stock is moving down. Examining my life utilizing the time frame method is an interesting exercise that can help us find the path we are searching for. On any given day our life may swing around crazily as we are extremely governed by many predetermined forces exerting their pressures on us. When examined on a longer time frame, those pressures that on a 5 minute slice of our life threaten to overwhelm us are shown to be easily eliminated. Taking many different snapshots our life allows us to move beyond our daily struggles and map out a much more thoughtful and meaningful existence. This process helps identify the direction our life is taking. What you do with that information is completely up to the individual but every good trader constantly reassesses their performance or direction in order to respond to a rapidly changing world and maximize their performance in it.

Pivot points are those places the market tends to reverse direction and they exist on many different time frames and for a host of reasons. On your way to work you are feeling good; sipping your coffee, reading the newspaper when an email comes from your boss detailing the new and unexpected projects that must be done today. If you start to get upset and your emotions begin to alter your thought process, you have hit a pivot point. This sudden reversal of your daily life is a downward pivot on a short term. This happens despite and regardless of what your longer term trend lines may look like. However the long term perspective has pivot points as well and they may very well start with some simple seemingly random event that over time gains momentum and changes the long term trend line. In retrospect it is easy to identify these points; when we chose our college and when we meant our husband/wife being just a couple examples. But if you are cognizant enough of your life's trend lines and their subsequent effect on your very own shaping and molding then you could identify even the tiny pivot points in the minutiae of life and take steps to focus on consistently driving your life toward your goals. You never know what might be a turning point in your life and therefore should stay constantly alert or else what started as a simple disagreement or bad decision may multiply, eventually counteracting the long term trend line and establish itself as the dominant trend and without constant maintenance this new direction your life has taken may be one you never intended. Of course if you find yourself there just focus on the pivot points that will bring you back to the direction you want. I could write for days on these two topics of pivot points and time frames in life but I will let anybody that reads this dwell on it and perhaps some thoughts…

PS Sorry about the email blasts that probably went out, I am experimenting with texting to my blog posts and clearly it did not work…