"Turning Down The Noise"

This sage advice comes to you from my Trending123 associate, Neuropsychological Trading Coach, Dr. Janice Dorn. This is what I've been talking about some.

Turn Down the Noise

Much out cry, little outcome...Aesop.

The Pareto Principle, sometimes called the 80/20 Rule is something traders must heed, both in the markets and in life. Originally, the Principle was a mathematical formula created in the early 1900's by Italian economist Vilfredo Pareto, and was use to describe the way in
which wealth was distributed unequally. In essence, he calculated that 20% of the people possessed 80% of the wealth.

Despite the controversy over how Pareto's original formula was translated and transformed, the fundamental thesis is valid today. Sometime around 1935, Joseph Juran coined the phrase "the vital few and the trivial many" in an attempt to elaborate on the work of Pareto.

80% of traders are in a state of reacting to what they perceive to be urgent and critical information. The constant message on TV now is "Breaking News" as if everything is breaking, important, necessary to be assimilated, will affect your trading positions and must be acted on NOW. This 80% needs almost constant guidance, is hurled from side to side on a sea of information and is in a state of almost continual crisis management. This, in and of itself, is a drawdown on psychological capital, due to the amount of energy which is necessary to put forth in order to keep with the barrage. In the end, 80% of the people are reacting to noise.

The remaining 20 percent are responding. They open themselves up to the possibility that anything can happen and are able to be still in the midst of chaos as they wait quietly and patiently for opportunity. The markets are changing constantly - things are always going up and down. Learn the lyrics to the Kenny Rogers Song, The Gambler and try to live and trade that way.

It is in your best interest, both in trading and in life, to become less reactive and more responsive. In order to achieve this, one must cultivate a centered, reasoned state of balance.
One must learn to sit comfortable in the pain of being presented with multiple choices, rather than to grab whatever is being tossed out at the time. Sit quietly, think, allow your brain to melt into a distant observer, and your body to become still. Be the eye of the hurricane and try to avoid the tyranny of the urgent. Know when to do something and when to do nothing. Both
your trading and your life will improve once you are able to turn down the noise and focus on what is really important to your bottom line.
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