What if we're looking for "catalysts" and "breakouts" and bursts of volume and volatility, because that's where the action can be found?
What if, instead, we filtered our search for instruments that were trading in the most stable manner, following relatively unchanging trends and cycles?
In that case, we would trade, not what moves the most, but what moves the most coherently and consistently. We wouldn't be predicting in the face of uncertainty; we would be identifying in the face of stability.
If we trade the opportunities that are most predictable with the least drama, how might that impact our trading psychology?
Might our trade selection shape our trading psychology?
Perhaps logic starts where drama ends--
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Additional note - 11/5/24: Notice something subtle. Many traders attempt to use technical analysis tool for predictive purposes. If we're trying to identify markets that are trading in regular, stable patterns, then the tools of technical analysis can be used to describe those patterns and help us align with those. To the degree that the patterns indeed remain stable, that would bring some predictive benefit. The main purpose of the technical tools, however, would be for trade idea generation, capturing the degree to which recent price action has followed stable cycles and trends (and, of course, cycles within trends).
When I create charts where the bars are defined by volume traded, not time, this helps normalize the market's time series and makes it easier to use technical tools to identify stable patterns. (Here's an interesting example from a few years ago; here's a relevant earlier post). It's particularly enlightening when we can identify stable patterns over multiple time frames, aligning our ideas, an idea that Brian Shannon has emphasized in his work.
Further Reading:
A Framework for Trading and Trading Psychology
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