Information Overload: What You Really Need To Know To Trade Better

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It has to be said: The antics of your mind throw many a spanner into your trading works.  There is no other way of putting it, you are the unwitting victim of your mind rather than being the master of it.

This simple fact, which I also discussed in my last article:” Why Fundamentals Don’t Matter”, has been the main cause of many a traders’ and investors’ failure.

In a perfect world every trader would understand that life in essence is a matter of choice. They would understand that no matter what stock, commodity or currency pair they are looking at, the issue isn’t so much about whether or not they are employing a trend following system, or a contrarian system; no, the real issue is the congruence they have with their approach and this means how congruent they are with their beliefs.

Since the overwhelming majority of all traders and investors have never questioned their reality and therefore blindly follow in the well trodden footsteps of the great traders and investors of this world, it comes as no surprise to notice that the assumptions upon which traders make their decisions are plain wrong.

Let’s face it: If it were a simple matter of copying the investments of George Soros, or Warren Buffet, or following the trading strategy of trading legends like Ed Seykota,  Richard Dennis or Larry Williams, all traders and investors would be millionaires  by now.

The reason why they aren’t, is to do with the fact that their (trading/investment) reality is very different from those of their gurus. Yet it seems a very hard thing to grasp that all those indicators and all the information you are trying your hardest to absorb from CNBC, Bloomberg et al does not help you to make better trading decisions.

Market information is only useful if you use it correctly.

This is the big tragedy: Most traders have no idea how to use information about trading and investing to their advantage. In an attempt to do the right thing, they are processing way too much information, which also happens to be the wrong information for their individual trading minds.

The real issue is not what you are looking at to make sound trading decisions, rather the issue is how you are using it.

If you were to be more discerning in assessing the information in front of you, you would dismiss most of it as irrelevant. Yet, you can’t do it, because you have not trained your mind to work for you. Instead your mind tries to please everyone. It is like a puppy wanting to ingratiate itself with everyone, it is so excited by the countless stimuli the world has on offer. This is precisely how the average trader’s mind functions. The pros know this and it isn’t difficult to take advantage of the low hanging fruit, as many a broker will tell you if they are honest.

Below are four mistakes traders and investors make when they process information.

1) They believe that they can replicate a system or method exactly, achieving the same results as their mentor. This is impossible for most traders.

2) They believe that fundamentals dictate trends, when actually cycles dictate trends

3) They think more information increases their chance at trading investment success, helping them to make the right decisions. It is a proven fact that exactly the opposite is true.

4) They believe that discipline is going to make them good traders, when actually discipline, being totally misunderstood, leads to many a trader failure.

So what is the above telling us?

For one there are no absolutes. It is all about beliefs. It is hard to grasp for the conditioned, linear mind that  there is no absolute right or wrong way to trade and invest. Yet you have been told countless times that there are some strict rules you must follow.

Knowing what works for you is THE KEY.

The main problem traders and investors have is that they have no clue what works for their unique trading and investment personality.

I challenge you, if you had to tell me in no more than two sentences why exactly you make a trading decision and explain your trading strategy and investment strategy to me, you couldn’t do it.  What’s more, the question will also show up all your in congruences in your belief and value system.

If I asked you to choose a strategy, permitting just one indicator, most traders would be totally lost. Yet, for discretionary trading and investing there is no better way than trading off almost naked charts.

The conditioned mind has a paddy at the mere mention of such a possibility. It has been conditioned to believe in the props of gazillions of technical tools to protect you against the vagaries in the markets: You must protect yourself from HFT, from market makers, brokers, not to mention your own lackluster trading psychology. The nonsense we tell ourselves and buying into it as real is really quite astounding:

Much to fear, and much to worry about in the financial universe.

The world of trading and investing is your enemy, or is it? Hardly. Yet most traders and investors are treating the game like a game of war. They are constantly on the lookout for some fall out from somebody wanting to trip them up. Hence the sheer multitude of trading information, indicators and trading systems available.

I have said before that it is all in the risk management. But that doesn’t sound very sexy, I know. Our minds are so addicted to the drama of the dualistic mind games we are allowing our untrained minds to indulge in that we lose sight of the fact that it is all an illusion. An illusion that is made real simply through the insistence that the thoughts are real, and not just passing thoughts made reality only through incessant persistent repetition without our conscious knowledge.

The way to consistent trading profits is not in looking at yet another indicator, or yet more algos, no, it is in your ability to disconnect from the collective mind theater and step into your very own personal trading universe.

“KISS”, keep it simple, means you start learning what really works for you, what is “true” for you and then translate that information onto the charts.

Trading and investing are games of possibility. We know from quantum physics that the universe is a place of infinite possibility. Isn’t it time that you found your own individual self and expressed that in your trading and investing?

In the final analysis you are the only one about which you need to gather information. But you must be thorough in this pursuit and trading and investment rewards will follow, I can promise you as much, having walked the path.


Mercedes Oestermann van Essen is an active trader, trading psychology coach and the author of “The Buddhist Trader” and other books on trading psychology. She holds webinars and bespoke trading psychology seminars for high net worth investors, and professional traders.


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