The Psychology Behind “Harmonic” Trading
Students of Elliott wave, harmonics and GANN will know about the so called hidden pattern of the universe which can be detected in the charts. Traders at large have big issues though relating the theory into workable concepts for their (trading) life.
The reason for this is mental compartmentalization
The linear mind does not like the idea of simplicity within complexity. Yet this is exactly how the universe works:
There is one law that applies to everything, yet there are infinite ways in which it manifests:
This law is evolution and pertains to how cycles evolve. Within this law are sub laws pertaining to timing, balance and human perception.
Ultimately all sub laws also are guided by the laws of cycles which are expressed through evolution.
The events we see playing out in our lives and on the charts are simply evolution personalised and individualised. This is the amazing infinity of the universe which splits and diversifies itself into infinite multiple forms of appearances. The Bhagavad Gita describes this beautifully.
The concept is truly ingenious in its complex simplicity
It is designed to keep us interested and guessing fooled into the belief of the never knowing humble human existence.
And here is the thing:
While you operate predominantly from the linear mind you cannot ever access this deep understanding and develop that inner knowing that makes for good trading.
The need to compartmentalise stops you from applying a general law that pertains to existence in your trading instead you operate in a mechanistic fashion of compartments for different faculties. Trading in your mind is a faculty that is governed by different laws, the laws of the logical mind.
Your Elliott wave count is only as good as your interpretation of it. There are times when it works simply and easily because your logical mind sees patterns it can recognise. The same is true for harmonics trading and GANN.
There are times when the best of trading methods appear to stop working.
Has it ever occurred to you that this is just one of the many illusions your linear mind as been suckered into?
Harmony is about balance. Balance is not static, rather it depends on movement. The energy that gives expression to all life forms is movement. Without movement there is no life. When something gets “out of balance” the process is as natural and harmonious as the move that leads up to that state.
Transition periods are a challenge because the logical mind does not recognize them in time because it does not understand the universal laws that creates them.
The paradox is that traders believe that they can develop trading systems that are going to produce returns forever, based on a static law, not on bio dynamic laws.
The approach goes against the laws of nature:
The universe is a bio dynamic place in which everything interacts with each other within the law of evolution.
Balance is not static, balance derives its patterns through the movement of particles. There is always order to the shape of this movement. The order appears to be random because no shape of the movement ever repeats in the same form again.
When you learn about the structure of the universe you automatically develop a deeper understanding of patterns. The Heisenberg principle demonstrates clearly how the individual influences patterns through observation. Understanding how this principle works in your trading should be foundational training for every trader:
You do not see the charts how they are, but how you are.
The Buddhists understood this foundational truth and turned it into the art of self mastery.
There is one simple reason why I teach traders to look beyond the veil of appearances and learn about universal laws of evolution and how to read and interpret cycles: When you have these skills you develop a much more acute sense of timing, together with an inert appreciation of how energy flows in the markets and in life. You develop intuition for imminent market moves you cannot have when your trading decisions are driven by a mechanistic approach.
Intellectualising these concepts in articles isn’t easy. I can only attempt to give you a taste for what it is like to trade from this higher vantage point and explain a little of what you have to do in order to get to this place.
When one embarks on a new experience the drive to do so never come from your logical, linear mind, rather it derives from the bigger place inside you that is ready to grow and expand.
Don’t make the mistake to allow your linear mind to be the master of your (trading) universe; it will fool you into many trading errors which could be avoided.