Fractal Psychology

Discussions about personal psychology for the individual trader.
Post Reply
Dave S.
Senior Member
Senior Member
Posts: 38
Joined: Tue Apr 15, 2003 4:51 pm

Fractal Psychology

Post by Dave S. » Fri Apr 18, 2003 2:09 pm

Forum Mgmnt,

In another thread we discussed the idea of trading multiple time frames using the same system. You pointed out that the trader psychology would be different across various time frames, so this might not work well (please correct me if I misunderstood your point).

This got me to thinking:
Couldn't trading psycholgy be fractal as well? If I day trade, then my horizon is the single day trading session. In this time I may have breakouts, sideways markets, periods of greater or lesser liquidity, and all of the things that someone trading on, say, a longer-term perspective would have, it's just compressed into a much shorter time. If, for example, it's been a down day, and I'm looking for the market to perhaps open lower with a bit of follow-through the next day, I will have a different perspective than a position trader who sees a long-term up tread, but that's because my time horizon is so much shorter. Thus, my psychology may be analogous to the postion trader using daily charts compared to the trader using, say, weekly charts.

I'm probably not expressing this as well as I'd like, but I'm certainly interested in your opinion (or anyone else who has thoughts to share)!

Dave

Forum Mgmnt
Roundtable Knight
Roundtable Knight
Posts: 1842
Joined: Tue Apr 15, 2003 11:02 am
Contact:

Post by Forum Mgmnt » Fri Apr 18, 2003 2:31 pm

Dave,

You mentioned:
If I day trade, then my horizon is the single day trading session. In this time I may have breakouts, sideways markets, periods of greater or lesser liquidity, and all of the things that someone trading on, say, a longer-term perspective would have, it's just compressed into a much shorter time.
Yes, this is true in terms of what affects the psychology of a particular person.

Humans are humans, after all. That's what allows the consistency of the markets across the decades and even across the centuries.

What I was getting at was something that relates more the psychology of events as a series over time.

Consider:
  • Trader A - A daytrader, has been making lots of money because of volatile (though non-directional) markets.
  • Trader B - A Long-term trend follower, has been getting chopped up because of those markets.
So while it may be possible to find points that are technically significant in all convergent timeframes (5 minute breakout of consolidation, daily breakout of consolidation, weekly breakout of consolidation), it won't necessarily mean that each of the groups of traders would respond the same way because each of them may be in a different psychological state.

Thus Trader A above would find it easy to keep trading his system but Trader B wouldn't. So they might not respond the same way to what might appear to be similar chart patterns on each of their timeframes.

I hope that explains what I meant a bit better.

Dave S.
Senior Member
Senior Member
Posts: 38
Joined: Tue Apr 15, 2003 4:51 pm

Thank you, c.f.

Post by Dave S. » Fri Apr 18, 2003 2:43 pm

Thanks,

Yes, this does explain your point well!
This is like a puzzle that just keeps getting more fscinating - hmmm...I just had another Topic idea!

Dave

Post Reply