In the last few days I've been having lots of ponderous, deep-style thoughts about how so many traders attempt to fight the market, and struggle with their own ability to simply (as Bill Williams brilliantly articulates) want what the market wants. Now you might think that I'm off the ranch and thinking more deeply -- or maybe what I'm now blogging about is esoteric and unmeaningful. But did cause a lot of thoughts this evening, and I hope that maybe it will lead you to think more often about your own ability or willingness to make sense of whatever market you trade.
I was thinking about the ability of a trader to bend with, or comply with, what the market wants, instead of swimming against the current, so to speak. Then I found this link on Wikipedia:
http://en.wikipedia.org/wiki/Stress-strain_curve
A stress-strain curve measures the amount of energy a material can absorb before rupturing. It makes me wonder if there could be a stress-strain curve drawn for traders -- the amount of pressure that a trader could withstand before rupturing.
And here's another link that I hardly understand at all, but sort of brings up similar thoughts:
http://en.wikipedia.org/wiki/Young_modulus
The Young Modulus is a method for measuring the load under which a particular material will buckle under compression. Could there be a Young Modulus to forecast the pressure at which a trader will collapse? I am positive that you are wondering what kind of crack I've been smoking, but I'm serious here. Don't you know a trader who has buckled under the pressure of a losing trade, after fighting the market and arguing about the fact that the trade "should have worked out"? Don't you know a trader who regularly says things like "look what the market did after I finally closed the trade at a huge loss -- it turned around and did exactly what I thought it would do."
These comments tell us a lot about a trader immediately. We can say about these individuals that they are willing to withstand enormous amounts of negative pressure but they refuse to give into it until they rupture their account. We could call the measure of their stiffness, or inflexibility, the Trader Modulus.
I have been re-thinking lately about how dangerous inflexibility, as personality trait, can be for traders. The market does not reward us for going against the grain. I'm not talking about trading with the trend, which is an oft-quoted maxim that has little or no meaning without context. Instead of talking about trading with the trend, I believe it's more valuable to talk about (as Dave Murphy intelligently puts it) getting in sync with the market?
This isn't the last I am going to say about the subject.
