BarroMetrics Views: Plans That Suit
If you read the comments, you’ll know that Paul posed a series of questions on how we determine of a trading approach suits our personality. This is a big topic – I could write a book on the subject. Clearly, I would be unable to do it justice in a blog or two. But, by way of introduction, I’ll post on some ideas that may assist Paul and others to take the issue farther.
In this blog, I’ll consider the way a trader takes in data. Most of us have a preferred mode of accepting data:
(see http://en.wikipedia.org/wiki/Representational_systems_%28NLP%29; note the article fails to mention ‘digital input’)
The four approaches are not mutually exclusive; indeed, some studies suggest we have although we have a dominant mode, we rely on at least one other representational system. In my case, I am what you’d call, a visual-kinesthetic. VKs operate via sight and feelings. That being the case, it is only natural I would gravitate to a chart-based approach. But, if I were digital-auditory, for example Buffett, then a chart-based approach would not suit.
That is not to say that we can’t teach ourselves to adopt other representational systems – we can; but that journey is a difficult one and many fail. Witness the high failure rate of pit traders attempting to make the transition from the floor to the screen. Part of the reason for the failure is due to the fact that most pit traders are auditory-kinesthetic. Moving off the floor, they had to switch from auditory input to visual and many could not make the switch.
So, that’s the first attribute I would consider when considering an approach to the markets – what is my representational system and what trading/investing approach best suits it.