Monday, August 10, 2009

Trade Like a Seahorse: Mastering Multiple Perspectives

During a visit to the aquarium in Cape Town, we passed by the seahorse exhibit. One interesting fact was that the seahorse's eyes move independently, enabling them to spot food and predators at the same time.

Traders are more limited than seahorses in that respect: they generally perceive danger or opportunity, but not both at the same time.

Many of the techniques of trading psychology, as well as many historical analyses of market patterns, are ways for traders to "switch eyes" and appreciate threat at times of potential reward and opportunity at times of seeming danger.

An excellent habit to develop is to ask where the opportunities might lie during points of apparent risk and where the dangers lie at times of perceived opportunity. If those questions do indeed become habit patterns, traders can truly become more seahorse-like.