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.