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Information Processing and Trading

Recently Brett N. Steenbarger, Ph.D. offered:

…Traders may fail, not because they are unable to learn market patterns, but because the patterns are not being captured in a user-friendly manner. Let’s take an example from schooling: A student in an elementary mathematics class might not pick up the idea of division by reading about it. When the process is explained out loud, however, or when it is demonstrated on the blackboard, the student immediately catches on. The problem is not that the student is stupid; rather it’s that the student assimilates auditory and visual modes of presentation more easily than the written word. Time and again during my student counseling days at a medical school, I witnessed academically struggling students suddenly come to life when they joined study groups. The act of talking the material aloud and processing the information (inter)actively transformed mere learning by rote reading and highlighting of notes. When you look at the information that is processed by the trader, you see that at least 90% of it is visual – most often pictoral, in the form of charts. The idea of using other senses to process market information – olfactory, kinesthetic, gustatory, even auditory – is quite foreign. It is not at all clear, however, that all people (or all traders) are visual learners. Might it be that traders fail, not because they’re unable to learn market patterns, but because the traditional ways of presenting these patterns are not user-friendly? Suppose data were presented in an auditory format, with trading volume represented by auditory volume and price represented by pitch? Or if traders read their information from a numerical table rather than a chart? Or if traders processed information in groups rather than individually? It is common to hear traders assert that it takes months or years to ‘learn the market’? Might that be more a reflection of the poverty of our displays than any existential reality? Putting different information onto our screens might be akin to shuffling deck chairs on the Titanic. If success has been elusive, perhaps it is time to ‘see’ in a different way.

We highly recommend to seek out others in the industry in addition to any study or reading you may be undertaking. If you don’t go out and experience some of this first hand you may be missing out on some bigger picture learning experiences.

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