UTE in Trading

BarroMetrics Views: UTE in Trading

UTE? What in the world is that?

UTE stands for Unconscious-Thought Effect. But what is that?

As a discretionary trader, I am well aware how important intuition is to my trading.  Discerning the difference between intuition and the ‘Flight-Fright-Freeze’ response  is a critical one to the trader.  Advances in neurology have provided some guidelines:

  • Be aware of the qualities of your emotions. There is some studies that suggest expanding our emotional vocabulary helps awareness.
  • Let awareness lead to feeling and accepting our emotions.
  • Distinguish between ‘awareness’ and ‘acting’: ‘awareness’ means we are conscious of our thoughts BUT being conscious does not necessarily lead to action. That is a separate decision.
  • Develop the ability to understand the foundations and premises of the intuition. 

For me, UTE suggests the environment when intuition is likely to flourish; it says that  “people are better able to make complex decisions after a period of distraction rather than immediately or after a period of conscious deliberation”.  (See http://pss.sagepub.com/content/early/2013/05/20/0956797612470958.abstract).

This is a useful study with many applications. For example:

  •  after our analysis of a market, take a short break before creating an execution plan; 
  • take short breaks when performing am analysis etc etc

I find that traders can reap a bountiful harvest the from the fields of neurology and behavioural finance. It behooves us to keep a viligent eye on research results.