Our decision-making process is dependent on how we take in sensory data and how we process that data. The majority of us are visual-kinesthetic i.e. we process information by seeing and feeling. It’s important that our decision-making reflects this process.
Dan Roam has written an interesting book for the visual learner: ‘The Back of the Napkin‘.
Part of his process he calls “the look & see, imagine and show”; they are inter-related and Figure 1 shows the relationship. The great thing is the process can be readily adapted to trading decisions.
“Look & See” are linked. It’s important to bear this in mind. While separation is easy when we articulate the ideas, in practice, they are more of a feedback process.
The ‘Look’ aspect is the first step - seeing the holistic picture and making a rough assessment. In this month’s video, this step involved:
- ‘Looking’ at the daily cash S&P from the 2007 high and making an assessment of its structure
- ‘Looking’ at the monthly cash S&P and relating it to the DJIA from 1895.
‘Looking’ is accompanied by questions and/or stream of consciousness thoughts. The more experience you have the more ideas you are likely to have. You may also have feelings - ‘this feels bullish/bearish’; ‘I feel uncomfortable - not an easy instrument’. It’s worth making a note of these for further evaluation. Whatever you do, do not dismiss any feelings or thoughts that ‘looking’ arouses - it’s probably your intuition at play.
On the other hand, I would not just act based on ‘looking’ - we are only at the first stage - and part of the first stage at that.
The ’seeing’ phase is the partner of ‘looking’ - it’s a more detailed assessment. And while the ‘looking’ phase is akin to brainstorming, the ’seeing’ phase is akin to logical analysis. In ‘Seeing’, we are selecting and chunking.
In May’s video, this occurred when I placed the Barros Swings onto the daily chart and evaluated where we were in the Tubbs Model. It also occurred when I asked:
- what is the key question that needs addressing?
- what are the lower time frames telling us about the key question?
To be continued tomorrow.
If you want to take a quick test to indicate your learning style, here’s a free site:
http://www.ldpride.net/learningstyles.MI.htm
FIGURE 1 Look-See-Imagine-Show
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