What you see is often what you 'think' you see, not what you really see!!!

As a trader coach and someone involved in trading psychology education, I often come across simple but well meaning advice given to traders. Whilst I appreciate the good intentions in imparting these nuggets of wisdom, I often find that these nuggets are in reality somewhat banal and meaningless (In fact I often wonder whether many of these people have really traded for a living or run risk - and in many cases it turns out they haven't). 

As an example: One very common piece of advice is : 'Trade What You See, Not What You Think'.

It sound like good sensible advice, and on the face of it, who would argue with it. - But the problem is we don't actually see what we see, rather we see what we 'think' we see. - If you are confused at this stage I don't blame you, but try and stay with me just a little longer. 

I am going to provide a little example of what I mean here; together with a little explanation from the world of Neuroscience.

Take a look at this shape, I am sure you are familiar with this particular illusion or one of its many variants. Much as you look at it, and contemplate it, your intellect tells you that this is impossible, you could not physically build it, but your brain is still telling you that you are basically seeing a cuboid shape.
This happens because we see with our brain and not our eyes. Neuroscience research has found that there are 10 times more neurons (The basic building blocks of your nervous system) going to the eye from the brain, than there are going the other way from your eye to the brain. Your brain receives light from the eye, but its the brain that makes it up into something coherent. Interestingly, the eye actually throws away much of the information it gets, leaving it to the brain to fill in additional information in its own ways. And here is the crux, the brain zooms in on templates from past experience, and is doing this on auto-pilot, you are not even aware of it. - Hence in this example, much as you know that is impossible, your brain still sees a cuboid.  

Just to add to this, our cortex, the outer layer and newest part of the brain, which in humans is vast and gives us the ability to abstract and rationalise; is scanning for similarities between the immediate situation we observe, and our stored experiences. Hence when you read a sentence such as this one: 

Aoccdrnig to a rescherear at Cmabrigde Uinervtisy, it deosn’t mttaer in waht oredr the ltteers in a wrod are, the olny iprmoatnt tihng is taht the frist and lsat ltteer be at the rghit pclae.

You will almost certainly read it correctly as:

According to a researcher at Cambridge University, it doesn’t matter in what order the letters in a word appear. The only important thing is that the first and last letter be at the right place. 

The reason you were most probably able to read the jumbled sentence, is we use context to activate the area of our brain that signals what we expect next. - It is the same with hearing, if we hear a sound that leads us to believe another sound will follow, the brain acts as if we’re already hearing the second sound. - Our brains draw the same conclusions with words and letters. It is possible that you did not get every single word correct when reading a jumbled sentence or passage but will believe they did because the brain will subconsciously go back and fill in any gaps in your knowledge based on the subsequent context. One final little example for you:

 Read out loud the text inside the triangle below:

Almost certainly you said 'A Bird in the Bush' ?

Try it again -  Still 'A Bird in Bush'? --


This time put your finger over the word 'The' and read it again?

I am sure you have it now - The word 'The' appear twice, but almost certainly most of you have missed seeing 'the' twice. - This merely emphasizes what I have written above.


- Is it any wonder that trading sometimes is such a difficult task?

I will leave it at that for now, however for those of you trading on the Non-Farms this afternoon, best of luck, and 'be careful what you see, or what you think you see'.


If you would be interested to know more about my work a as a 'Trader Psychology Coach' and  'Trader Performance Coach', and how we can help you or your colleagues to become a more effective in your job, please feel free to contact me at sgoldstein@bgtedge.com or visit our our website at www.bgtedge.com.