Relating behavior to markets is very interesting.
Being specific emerges from looking at about 6 things.
The bottomline is that any person can use his emotions as "tells" regarding his strengths and/or weaknesses.
When a person is less than optimally skilled and knowledgeable to partner with a market, his performance is less than optimal.
Personal emotions are very accurate for providing "tells" at just when these failures are ensuing.
te best emotional tells are constantly being explained as "problems" in ET. As you read, an irrational process is suggested as the solution.
Baron has suggested I use more dignified ways to address some people who are less than proficient. Good idea from him to me.
The literature is replete on whther BF is or is not BS.
What is penultimate is the bottomlines.
If emotions come into the picture for anyone at ant time and the emotions are warning relateed to survival (fear, anxiety and anger) the person is specifically being told at that time that something is amiss. Specifically a person is being told to flee; he is in danger.
The solution BF suggests is NOT "controlling emotions". The solution is to "make reasonable changes in technique".
Most anomalies can be eliminated in EMH by "making changes in technique".
My post is a death nell for a lot of people. Sorry about that.
When BF examine overreaction and underreaction, it is determined that they balance out quite well. This is just a statement that the participating community is screwed in two ways and both group are not going to do very well. No one is in both groups, it turns out.
The generalization I like best is about the TWO MOST SIGNIFICANT PRINCIPLES I DEAL WITH. Here are twp more failure components where people's emotions are providing "flee" instructions to the individual.
1. pre event continuation of pre event abnormalities,
2. balance with post event reversals.
I suppose this is a behavioral measure of the fact that people are lagging traders for the most part; meaning they are doing the wrong thing and doing it at the wrong time as well. reminder, your emotions are signalling to you to "flee" this circumstance.
Lastly is the major BF correlation. People above all are irrational in a very consistent and correlated way. On ET this is charcterized often as empathetic posts among those having the same emotional warnings.
The good news, BF has determined smart investors take advantage in EMH by exploiting mispricing and irrational investors.
So the best contribution that can be made from BF results is that any trader at any skill and knowledge level have an emotional guide.
If someone learning wants to take advantage of his spent time, he can keep a journal. The prompt for making an entry is clear from BF. when you get emotional "flee signals", that is the time to log in your journal.
Having the logging you know just when and where you are in trouble with your methodology.
BF instructs you to do one effort: MAKE REASONABLE CHANGES IN YOUR TECHNIQUE.
Thus the above outlines how iterative refinement works in the learning process of learning to trade.
As you make methodology improvements, you get graded on these improvements. You figure out something and you apply it. You get an emotional response to this iterative improvement in your trading.
Not to be unkind or anything, I notice a person who is contributing to a person who is an ininformed OP somewhere else. This contributor is criticised and his critics are staightened out by historical references.
I notice the money maker is also not winning on all trades. I also notice he watches the market all day long and is almost never in the market more than three times and for only a few minutes each time. He trades forabout 45 minutes over 6 1/2 hours. The OP is losing money and telling everyone no one can make money.
Both have emotional signals coming to them, neither leeps logs or journals although the successful guy posts in ES P&L daily.
Here is the thing,, trading P&L's have to be plotted on semilog graphs. Suing a journal to log emotional signals nd then make reasonable changes in technique is how to shift the P&L curve most frequently going point to point.
BF states the errors made by people. BF finance states how to detect where and what methodological mistakes occur. BF states how to itieratively refine a methodology.
Personal note: in my trading I use two principles: Continuation and reversals. (see Dodd/Granville). BF confirms thee are cardinal circumstances for when the EMH is underfire by poor traders. BF says these are the places where smart traders exploit irrational traders.
An exit is an identity with an entry. In five stages, atrader can examine the end of continuation, the beginning of change, optiimum change, the end of change and the beginning of continuation. This casan keep atrader IN the market ALL the time and ON THE CORRECT SIDE OF THE MARKET ALL THE TIME.
Whatare the emotions accociated with this? They are comfort, support and confidence. Thus if I feel even a tinge of the "flee" emotions, look immediately to see which of the five stages I am in regarding a reversal at optimum. There is always a consideration at that time of looking at my smart trader leading indicator, the DOM, my OTR charts (YM and ES) and the T&S with particular interest to BBid, BAsk and block size rate of change.
If you pilot on a regular basis, you grab some scot's towels and scotch tape. you cover a lot of the panle indicators. you fly without seeing at them, but you DO check out your supposed dependence upon them whic detracts you form perception of flying conditions. some times an Eagle hangs out around a wingtip. you know sooner or later he is going to come over a bash the canopy and then take fly to circle higher and higher above your climbing the same thermal. He's laughing at you too.
Find out why you can't see the thermals on your indicator panel. Find out how to fly with egles. Get BF straight to begin with.
Sorry I am being so unpleasant to those who are mistaken.
