The Traders Journal

Blind Spots


BananaI attended a lecture last week given by Dr. Anthony Greenwald, a psychology professor at the University of Washington.  Professor Greenwald was presenting findings from his new book, Blindspot, and as he spoke, I found myself thinking that he was addressing his comments directly to me.  As is so often the case, it seemed that this speaker was talking explicitly to me about trading the stock market.  The fact is, of course, that the professor never mentioned the markets.  But he did talk about the new field of study in psychology called the “Implicit Revolution”.  I gleaned a lot of wisdom from his talk, and with apologies to Professor Greenwald, I’d like to share these “gems” that came through the very personal lens of my own myopic stock market focus.

“Implicit” is what your own mind does when it’s on automatic pilot.  It’s how you unconsciously react to what you see and hear around you.  This can be both good and bad but, as a trader, you must be in touch with it and aware of what is going on.  As you gain mastery over your own implicit behavior, your intuition becomes more highly developed and experienced, and you can actually count on it for yielding desirable results.

Professor Greenwald used many examples to convince the audience of its collective blind spots.  He did this most convincingly and left no doubt that we all have blind spots.  As a technical trader or chartist, I was impressed by a number of his visual examples.  I make my living from what I see on charts.  The simple examples he presented produced awesome illusions and odd effects.  On one level, I clearly need to consciously be in touch with my own personal “lenses” to understand the filters I was applying and the context in which I was reviewing my charts.  Context is everything.   I realized how important it is to stick to an analysis methodology that deploys one sense at a time (i.e. visual).  The reality is that different senses may override one another to clutter and confuse any desired objective for consistency.

On another level, from Professor Greenwald’s examples, I clearly saw how it was possible for so many different investors to draw so many different conclusions despite all focusing on the same stock market.   He also spoke about intriguing research that proves our brains have speeds.  In essence, it is possible for us to think fast and think slow.  My own experience bares this out.  When I’m trading during market hours or when I’m teaching in a classroom, my brain is clearly in a fast mode.  When I’m driving to work or reading a magazine, it’s in slow mode.  My own embellishment is that I know when I’ve been in fast mode for any extended period because it’s more tiring physically.  The corollary lesson here is this:  don’t show up in slow mental mode during market hours and think you can start trading as if your brain is in fast mode.  Learn to recognize which gear you’re in.

Professor Greenwald’s lecture sent me scurrying back to my trading journal to help me better understand my own blind spots.  I must appreciate certain personal biases of mine as they impact my implicit reactions to stock market forces.  I must always consider the powerful influences being exerted upon me within the context of the day’s market and my own present mental state while remaining aware of my implicit and automatic reactions to certain situations.

As an investor or a trader, I adamantly believe that the single best tool for helping you understand your own blind spots is your written trading journal.

Trade well; trade with discipline!
-- Gatis Roze


Gatis Roze
About the authors: , CMT, holds an MBA from the Stanford Graduate School of Business and is a past president of the Technical Securities Analysts Association (TSAA). He is also the co-author of Tensile Trading: The 10 Essential Stages of Stock Market Mastery (Wiley, 2016). A full-time investor for over 25 years, Gatis has taught sold-out investment courses throughout the Pacific Northwest and beyond since 2000. Learn More

Grayson Roze
is the author of Trading for Dummies (Wiley, 2017) and Tensile Trading: The 10 Essential Stages of Stock Market Mastery (Wiley, 2016). He has worked in the financial services industry for since 2012, and now serves as the Business Manager for the company. He holds a Bachelor's degree from Swarthmore College. Learn More
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