Oct

30

Time is the substance from which I am made. Time is a river which carries me along, but I am the river; it is a tiger that devours me, but I am the tiger; it is a fire that consumes me, but I am the fire…Jorge Louis Borges

The majority of human beings conduct themselves as if they intend to live forever. In essence, there is no systematic or productive review of the past, no real or meaningful planning for the future and minimal learning from the present.

Sigmund Freud posited that the unconscious mind does not have a notion of time, and that our deepest needs and wants remain, for the most part, unchanged throughout life. When you think about this, it is a compelling confirmation of the saying that most people lead lives of quiet desperation and die with their song still inside of them. They don’t take time or effort to find out the words or lyrics to their song, let alone try to sing it.

Crowd or mass behavior is even more primitive and impulsive than that of any one individual, since crowds tend to pay less attention to time. An individual alone can at least be aware of time, especially,when feeling lonely or longing. In a crowd situation, there is only the moment and there is no limitation on time. It is as if whatever is happening can and will go on forever (Party like there’s no tomorrow). Eventually, the music stops; however, crowds, in the heat of the moment, have little perception of time or limitations.

Gustave LeBon, the French philosopher and politician described in “The Crowd” a collective mind-set that is completely different from what that individual would feel, think or do in isolation. Freud believed that attitudes toward group leaders stemmed from childhood feelings toward the father–some combination of trust, fear, desire for approval and imminent rebellion. Group-think of this type can be regressive and infantile to the extreme. This is part of what manifests, on a larger scale, as panic buying and panic selling.

Mass mentality is magnified in real-time virtual stock trading rooms. The perceived necessity is to be part of this crowd by saying something which the individual believes to be clever, insightful or original so that one is not invisible, but makes one’s presence felt. This type of behavior can, if not modulated and regulated, go on for very long periods of time (since crowds have no real time perception) and result in escalating behaviors as various members of the crowd struggle for dominance or simply to be heard, seen or recognized. It is noise and more noise. In order to be recognized as part of the group, individuals may resort to verbal or physical behaviors which would not be recognizable to those who know them apart from the crowd situation.

In the case of a “virtual” crowd, such as a trading room, the verbal exchanges can take on even greater intensity, since one is ( for all intents and purposes) anonymous in cyberspace. The primitive, aggressive portions of the brain overpower the newer, more developed areas of the brain, often in ways which even the individual does not believe. How many times have you heard someone say, or seen someone type “Did I really just say that?” The individual is in disbelief that he or she allowed and could not control primitive limbic impulses and deep-seated drives. “OMG…sorry, I didn’t really mean that…or..I can’t really be saying that, can I? or “What was I thinking” or “Oops, wrong room LOL.” The use of emoticons and music further cloud ,deceive and add even more cacophony and tachistoscopy.

This situation is exacerbated further by the volumes of information, disinformation, misinformation and media verbiage that assault the trader’s mind, body and spirit every day. With few exceptions, this is deception, smoke and mirrors. The rat brain (paleo/archicortex), designed for flight or fright is attuned constantly to the possibility of attack, thus highly paranoid about and vigilant for the many types of deception that are perpetrated on a daily basis in the financial markets. The rat brain reacts with fear, greed, anger, retribution, sarcasm and loathing of self and others. The new brain ( neocortex) filters the information, makes a logical decision about its importance and then responds. Sometimes, the best response is to do nothing. Great traders know when to react and when to respond and are acutely aware of the difference between reacting and responding. Great traders have learned to make the old brain and the new brain work in harmony and flow, rather than battling continually with each other.

Time and price are facts of economic life. Because ontogeny recapitulates phylogeny, people repeat behaviors and cycles repeat. Windmills of your mind are simply never ending or beginning on an ever-spinning reel. The brain is a “time machine,” assert Duke University neuroscientists Catalin Buhusi and Warren Meck. Understanding how the brain tracks time is essential to understanding all its functions. There are cycles of weather, the moon, politics, commodities, currencies, stocks, sectors. art, fashion, food and just about anything that you can imagine.

Unfortunately, the majority of traders are unable to recognize these cycles because they are blinded by noise. It is only when traders are able to separate from the noise that they achieve the clarity of mind to recognize cycles and cycle changes. One way to attempt to filter the noise and look for order in the markets is through numbers. The work of Isaac Newton (1643-1727) and Leonardo Da Vinci (1452-1519) contains interesting correlates of numbers in the markets. Newton’s Law: for every action there is an equal and opposite reaction translates to the AB=CD parallel movement pattern of Gartley. DaVinci’s Codex notebook on the Fibonacci Summation Series illustrates the ubiquitous nature of these numbers throughout the entire universe. W.D. Gann wrote extensively on time, price and pattern. Gann ( who was born in 1878 and reportedly started trading in 1902) stated that time has the strongest influence on the markets because ” when the time is up, the trend changes.” The essential premise behind Gann’s use of charts to predict price was : history repeats.

A ton of stuff has happened since 1452. The markets have become more complex, global, computerized and trade essentially 24 hours a day. The herd mentality is at work, but on a much larger and highly magnified scale. Deception is more subtle and sophisticated. Time seems compressed and trade more frenetic . It is as if the logarithmically- accelerating rate of change of technology is permeating our minds and bodies in such a way that everything is urgent, breaking news, want it now, get in and get out quickly, take the profits and run. Is time all we really have so we must grab for all the gusto and goodies now, quickly, furtively, and then start looking immediately, frantically for the next big win? It is not without coincidence that frenetic is synonymous with inflammation which underlies a huge number of human diseases, many of which fall under the general rubric of “stress.” The toll on wellness and health is enormous, since stress debilitates and kills.

Accelerating change aside, human emotions have not changed. Greed and fear are the same now as they have been from the dawn of civilization. Those who win consistently more than they lose have learned to self-regulate the forces of greed and fear. They have trained themselves to harness and respect the power of numbers. They have learned that time takes time, and that a trade keeps working until it doesn’t. They allow time, price and pattern to play out.

Successful traders have learned to filter, modulate and use whole brain thinking to their advantage as they trade the numbers. They realize that when the time is up, it is up and they are able to get out and get ready for the next opportunity. They know that time is on their side, and they are prepared for it. From a place of relative calm, stillness and centering, they open themselves to receive and act on the messages that their whole brain time machine is telling them.

Time is nature’s way of keeping everything from happening at once…Howard Hoffman


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  1. Ruchir on July 24, 2016 4:32 pm

    Hey, nice post on WD Gann. It is the underlying philosophy of any Holy book such as bible, which we if understand (even if subconsciously) we start to succeed in the field we are operational. These Holy books have been written and represent the music of heavens or the planets and the person who reads them again and again becomes magnetized with that frequency and starts operating with the natural cycles and hence succeeds in his life. I am going to write many things about WD Gann in coming days on my website: www.ruchirgupta.co.in so stay tuned.

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