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Perceptions Perceptions are an interesting topic. We often tend to act in a manner coherent with our perceptions, so it is wise to know how good our perceptions of reality actually are. For our perceptions can determine, to some extent, our actions and our actions tend to determine our outcomes. Some examples might help. When I used to trade market persistence - that is I was a trend-follower - I used to track the FTSE-100 future premium. I even sought out and purchased a graphing product that would plot, in real-time, the absolute difference between two instruments from the FTSE-100 cash and FTSE-100 future data feeds. I used the plot of premium to notice cycles in the market and give me an extra buy and sell indicator. One day my perception changed - after I noticed that premium was often extremely high at local tops and extremely low (or very negative) at local market bottoms. This perception change coincided with an improved level of profitability - I almost stopped losing money. Then my perception changed again after studying rapid falls. I noticed that a majority of these begun at points where either: - future premium was very high, or - future premium was unusually low. This result was surprising to me and so placed me in thinking mode - I started to think of why the market makers would respond in that way, and the limited empathy I obtained coincided with another step-change in profitability - I was now actually keeping some of my profits. So looking back I can see that as my perceptions changed, so did my actions, and so did my outcomes - in this case my trading results. Other examples of perception difficulties are from various case studies - the names have of course been changed. Jim was one of those people who see marketing or selling everywhere. He was looking for the catch or 'angle'. Jim was so sure that his perception was the only valid perception that he became angry when he could not find a catch or 'angle' - in the event he had to invent one and become self-righteous about it. Sue knew how she should learn - she even knew in what sequence she should be taught a subject she freely admitted she knew little or nothing about. Sue was able to see the funny side of the 'consumer' always being right and the situation had a positive outcome. Lessons Learnt A fairly common perceptual difficulty often seems to be related to our consumer society. We are so wrapped up in being consumers, it seems difficult or even awkward to have a non-consumer viewpoint. Or perhaps more accurately, our perceptions are a compound of our beliefs and our vantage point. Paradoxically this makes it easier to have empathy with another point of view if we realise that it is only our vantage point we need change, not our beliefs: - I was locked into different aspects of a consumer viewpoint of trading, - Jim chose to protect his belief, invented reasons and became self-righteous, - Sue felt she called the tune until relaxing her 'consuming mode'. Perhaps the customer/shopkeeper role-play seems to be the basis of one of the more common perception divides in our consumer oriented society - and yet in our hearts we know that empathy is a useful tool. But many of us rarely seem to get past the restrictions of one vantage point - that of consumer. As traders this is sad, for new vistas open up when we can: - consider another vantage point, - dream the perceptions that naturally flow from another mind-set, - change our actions to be coherent with this new viewpoint, - reap the rewards of new outcomes from new actions. |