How to use the levitation effect in the markets.
The levitation effect is the effect of our treasury dollars buying into the market place. The result of the levitation effect is the market is buoyant, almost floating along getting higher and higher on deteriorating fundamentals. Basically the ability to stay up no matter what is pulling it down.
I am writing about this because it also has a psychological effect of disbelief to a trader that understands some fundamentals and has expectations of where the market “should be” or how it “should be acting”. You can see the psychological effects on the traders themselves if you watch traders being interviewed on the news and see them throw their hands in the air, rolling their eyes back wards and shaking their heads in disbelief.
Reviewing my trading for the past few months I can see that I initially was fighting the levitation effect and taking smaller gains on selling the market. I was getting more and more pissed off at the levitation because it “just wasn’t natural”. My trading self esteem was taking a hit. I longed for the volatility of the past year and the huge gains I made shorting the market.
I came to understand that if I did not accept the levitation effect, my trading income would suffer.
The quandary was that if I traded with the trend and kept buying into the sham was I really buying into and supporting the sham myself. I work to keep my opinion out of my trading and have made the decision to follow my system yet I realized that my profitability was decreasing. I have quantified how indisriminate discressionary trading, while making me feel good, does not pay as well as quantified discressionary trading. But now it was not the trading system, it is the way I felt buying into this fantasy of the market place.
That is when the change occurred. I noticed that the cost of not recognizing the levitation effect was larger than the benefit of being right about the economy. My righteousness was overpowering the profitability of trading with the market. I addressed this underlying benefit of being right and acknowledged how expensive it is to my trading and now can trade with the levitation.
PS. now I feel good about that too.
remember, Mastery is based on Conquering oneself.