Seven Pillars

Working Memory of  human brain is a concept that always attracted researchers of Cognitive Psychology and Neuroscience. Working memory which is also called short term memory is the system that holds multiple pieces of information in the mind. Short term memory is responsible for the retrieval, processing, integration and disposal of information during a decision making process.

George A Miller of the Princeton University has done extensive research on this subject. His research is one of the most quoted papers in Psychology. This is frequently referred as Miller’s Law. He argues that the number of variables an average human can hold in working memory is Seven, Plus or minus to two.

Trading, especially a discretionary method is always a decision making process. It is very important to limit the number of information variables within the capacity of our short term memory for its effectiveness. Earlier I was using a lot more and was not able to cope with that. I had to eliminate and discard a lot and now the structure rests on just seven pillars.

Trend, Range, Decision Points, Space, Critical Mass, Order flow and Risk

If you are trading a discretionary method, please do a system audit. I am sure you will find too many variable that are not contributing anything but only overloads your working memory. Ensure that you are not using too many variables which are beyond the capacity of your short term memory.

The thousand pillar mandapas of South Indian temples are architectural marvels and they weathered natural calamities, wars and invasions for centuries. But your thousand pillar trading method will crumble like a pack of cards in no time.