Specific Topics – Cognitive Thinking Styles and how to use them for Trading
Why do traders see the same chart differently? It is amazing when watching different traders trade, Two traders can see the same chart and one trader will go short and the other long. Literally at the same time. What is it that causes the human mind to see the same thing so differently?
Human beings have a particular problem with flying that we didn’t know we had. While flying in an airplane, if you can’t see the horizon, we humans cannot necessarily tell if we are right side up or upside down. Our internal gyro scopes are not great at telling us that information. During World War II, the military discovered that when pilots would fly into a fog or clouds, they sometimes would emerge on the other side flying upside down with no idea they had been upside down.
A psychology instructor studied this and came up with a name for the cognitive thinking style. If you are the kind of person who could tell when you were flying upside down, you were “field independent.” Can you spot the shape on the left in the one on the right in the thumbnail chart? You either see that shape or you don’t. If you can’t, here is some help – click here. The more likely you are able to find the shape on the left in these squared grid on the right, you are “field independent.” If you have a hard time finding the shape, then you are more likely “field dependent” and more likely to come zooming out of a cloud bank upside down when flying in an airplane out of a cloud.
In general, people who exhibit “field dependence” tend to rely on information provided by the outer world. In other-wards you need to see the big picture in trading a market to see where you are on a short term basis. Those that are “field independent,” you can see the trend on viewing where you are in the market at the moment – but perhaps not see the long term trend. Both styles could be both opportunistic and problematic.
Can one change they way they think? Perhaps one can train oneself to learn how to be like one or the other, but the more important issue is to know what your cognitive thinking style tendencies you have. You then can ensure your trading strategy indicators relate to the type of cognitive thinking person you are. Trading psychology food for thought.