Kafka, Surrealism and Trading

There are quite a few interesting stories breaking today, but since readers can find most of them somewhere else, I thought I might focus on a story many may have missed that I think is excellent fodder for short-term traders and long-term investors alike.

Science Daily has a thought-provoking piece out today with an intriguing title: Reading Kafka Improves Learning, Suggests Psychology Study. The article summarizes the findings of Travis Proulx and Steven J. Heine, whose Connections from Kafka: Exposure to Meaning Threats Improves Explicit Learning of Artificial Grammar is slated for publication in the September edition of Psychological Science.

Science Daily captures the essence of the research findings as follows:

“The idea is that when you're exposed to a meaning threat – something that fundamentally does not make sense – your brain is going to respond by looking for some other kind of structure within your environment,” said Travis Proulx, a postdoctoral researcher at UCSB and co-author of the article. “And, it turns out, that structure can be completely unrelated to the meaning threat.”

Proulx and Heine’s research demonstrate that subjects who were exposed to literature that was absurd, nonsensical or surrealistic performed much better when tested shortly thereafter for pattern recognition skills than control subjects who read similar material that was easy to comprehend.

So…how does this apply to trading? I am going to stretch the rather narrow conclusions drawn by Proulx and Heine and suggest that traders/investors need to get out of their comfort zones more often. They need to look at new asset classes they are unfamiliar with, new markets, new trading vehicles, new fundamental information, new chart patterns, etc. Perhaps they should even venture out from the comfortable realm of Mozart and Monet to Schoenberg and Dali.

Keep pushing the envelope and don’t worry if new pathways look chaotic at first. The more you get out of your comfort zone, the more that zone begins to widen and the better you will be at recognizing important patterns and opportunities across that zone.