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. 

5 thoughts on “UTE in Trading”

  1. Hi Ray,
    What you taught at the HOS 2011 could be coded by MQL4 easily to be implemented on the MT4 platform
    – for the System/Mechanical Traders

    As a successful Discretionary Trader,one of your Trading Rules is “to break the rules discretionally”.

    I am curious, is your best student a non-discretional trader?

  2. HI Paul

    Yes the top 5 graduates are all discretionary traders.

    But that is not the key question for newbie traders. The key question is whether a trading method suits a trader’s personality.

    I went to great lengths to ensure that the HOS trading method is easily codable for precisely this reason.

  3. Hi Ray,
    I am not surprised! -:)

    Naturally, you trade by “intuition” (as a discretionary trader)

    What is “obvious” to you, could not be perceived or understood by many traders.

    Many will keep on hearing,but will not understand; many will keep on seeing, but will not perceive!

    Blessed are those eyes, because they see; and those ears, because they hear.

    Just like vision cannot be taught but caught, the trading “intuition” cannot be taught but can only be caught
    – by your best graduates!

  4. Hi Ray,
    You wrote:
    “The key question is whether a trading method suits a trader’s personality”

    How about trading beliefs?

    One lady told me she must trade with Moving Average.

    The other told me she was taught that Indicators are lagging indicators. She only traded Breakout.

    Both of them will most likely not to follow 100% what was taught in HOS 2011!

    Would TRT start a trading programme that would tailor to each student’s personality, beliefs, goals …?

  5. Hi Paul

    We are now shifting to the realm of therapy.

    In an ideal world, our beliefs will be constrained and shape by the interaction with reality. Unfortunately we live in a less than an optimal environment.

    So, the first question is: are we capable of studying our results? Then through then identifying our limiting beliefs (i.e. those beliefs that don’t accord with reality and don’t serve us)? And then from there change limiting to empowering?

    If not, then are we capable of studying our results, identifying our belief systems and working them so as to achieve our goals?

    For example, the lady that trades breakouts. Research shows that most, if not all breakout systems make money on around 38% to 33% of trades. In addition the studies show that breakouts work best on a large portfolio.

    In her case, her optimum strategy depend on her risk management and to have enough capital for a large diversified portfolio.

    In my experience the probable answer is no. Too many newbies seek to bend reality to their belief system rather than change their behavior to work with reality.

    As for classes tailored for individual traders – unlikely since classes depend on teaching ‘universal’ tools. It would extremely difficult to run such a class.

    You could find that program with one-on-one coaching.

    But you would need to find a coach successful trader who is well versed in all areas of trading – fundamental and technical – and in psychology.

    Very few coaches around who qualify, and those that are charge around SGD1000 per hour. Hardly rates for the common man.

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