You can apply your brain to excel in trading or to lose everything. In this video, you will look at trading psychology in the perspective of human brain as a wet non-linear machine.
Traders often see price action as a non-linear entity. That is to say, they tend to believe that a formula is enough to capture the behavior of the market, which is a non-linear entity. Constantly, traders work hard to come out with a linear solution for a market that has a complex behavior and also random.
This tendency of discovering a linear formula for a non-linear entity leads the traders to believe that there exists a holy grail and they pursue the process of finding a holy grail for many years. There exists none. Also, the human psychology is seen as non-linear. It is unpredictable as human psychology or the brain lead the market in a chaotic fashion. Hence, the human brain is seen as a non-linear machine, which drives the markets, and cannot be used for analyzing the non-linear market.
Hence, behavioral economics is seen as a solution to this problem. It is important to analyze the trading psychology and how the human brain works when dealing with risky situations like trading the financial markets. Successful traders try to keep things simple and focus on qualitative analysis. Trying to keep things simple remove those obstacles that prevents you from making rational judgements. One important indicator that you can analyze related to the chaotic nature of the market is the chaos fractal indicator, by Bill Williams. You can try to model your strategy using the breakout of fractals, in higher timeframes.
The conclusion of this video is that you cannot discover or use a simple formula to define the holy grail for the markets, which are non-linear in nature.