fractal behavior

All posts tagged fractal behavior


I am smart.

What this means to me:

This is not meant to be an egotistical post, but is a time to dive deeper into a point that Denise Shull made in Market Mind Games. When presenting her idea of fractal behavior, she says,

Since I have been consulting on Wall Street, I have yet to find someone who habitually fights trends that doesn’t ultimately reveal a very clear and specific reason that arises out of their personal and family history. The easiest ones are traders who can notice that they want to prove they are smart.

Knowing that one of the behaviors that can cause me problems is fighting a trend, this paragraph just leapt off the page at me when I read it.

As a child, I was tested and classified as a special education student. Not because of any difficulties, but because I qualified as gifted and talented. In 2nd grade I finished our math textbook a month or more before school ended. In 3rd grade, I went to the 4th grade classroom for reading. Eventually, I was accepted into a magnet school and surrounded by other “smart” people. We were very competitive, or at least some of us were. My weak spot was English, but in math, science, and even German, I was one of if not the top student in the class.

Both my parents were teachers, and my mother taught the lowest of the special education students that attended school. While never admonished for a “bad” grades or rewarded for “good” grades, I believe there was both encouragement and an unspoken expectation that since I could do much better than my mother’s students, I should do my best and earn the highest grades I could.

What this belief gets me into:

Being smart generally means I catch on to concepts quickly.
Trying to appear smart and educated.
A desire to improve myself.
A desire to present myself as a better trader than others.
It supports a competitive side of me that likes to win.
Connecting the dots of different ideas.
Relying on my intellect rather than being in touch with my emotions and feelings.

What this belief gets me out of:

Studying and preparing. I wish I still had the little sign I was given in elementary school that said “Genius is the ability to avoid hard work.”
Diving deeply into a task.
Giving proper weight and attention to my emotions and feelings.

Limitations of this belief:

It encourages me to present the best possible side of my trading. Being smart has meant getting in as close to the bottom as possible and out as close to the top if possible. After all, what could be smarter than selling at the absolute top or buying the bottom?

It has been closely connected to my trading results. My expectation has been that a smart trader makes trades that make money. Losses only appear smart if they keep me from losing a larger some of money. Relating being smart to monetary results instead of following trading rules is a real challenge. (There’s another belief that I am a creative person and don’t like rules hiding in there as well.)

If I understand a task intellectually very quickly, I may miss some of the important nuances and/or the impact it might have on my emotions.

Utility of this belief:

Believing I am smart encourages me to continue to grow and learn. I will fix mistakes and tackle new obstacles, always seeking to do better than my colleagues or my previous performance.


There is definitely a utility to being smart. The catch is in how it tries to manifest itself. Trying to be a smart trader by only having winning trades is actually not very smart. Being a trader who develops a clear system and follows clear trading rules is a smart trader. Keeping those ideas from getting confused is the real task here. In the trading context, a losing trade doesn’t make me dumb. It can make me smarter if I choose to see it as paying for information about the market.

Not all trades are winners, and no one can pick even most of the tops or bottoms. Lacking those skills, I can still be smart by trading a system that fits me and my personality.

Trying to do anything else is actually pretty stupid.