Creativity in Finding Market Opportunity
As I've emphasized in the Trading Psychology 2.0 book , creativity is essential to success in trading financial markets. Finding opportunity that others don't perceive is the heart of what great traders do. That requires looking at new things and viewing old things in new ways. The very successful participants in markets enjoy creative discovery, and that keeps them excited about markets regardless of recent profitability. Consider a standard technical indicator such as Bollinger Bands. We could view the market--or a stock--to be a buy when it closes above its upper band and a sell when it closes below its lower band. The idea is that if the market is more or less than two standard deviations from its recent average price, that is indicative of a trend. But suppose we view the bands differently. Suppose we look at every stock in the NYSE universe and identify how many close each day above and below their upper and lower bands. Now we've t...