Designing Your Trend.

In financial markets, cycles in nature and in culture, we often see “trends” emerge.

Trends are interesting, and they seem to be an integral part of crowd behaviour and psychology.

Of course, trends have both a start point, a period of momentum, and then, a point of exhaustion at which there can be a reversal and a change in trend.

Market timers either trade the trend, or, try to find periods of exhaustion, or reversal.

The interesting thing, is that we can look at trends on different timeframes – annual, monthly, weekly, daily…

Then, we can also change the sample size, or the “group” – we could look at the trend of a particular market, group, industry, family, or friendship circle.

And the group size is where it gets interesting – when we establish the type of behaviour that we want to see, we can reverse engineer the whole process for the benefit of both ourselves, and others.

Here are the steps:

1. Establish the desired trend: productivity, attitude, kindness, project output, creativity…
2. Create the group that appreciates the idea of the change and sees it as a status upgrade. Trends are a function of crowd behaviour. They aren’t rational, and they aren’t up to the individual. Who’s in your cohort?
3. Create the “flip.” This is the first wave of the trend. In what’s called “Elliot Wave Theory,” this is wave 1 – it’s the initial push. Not extreme, but clear. What does this first wave of action look like for your group?
4. Build momentum. Trends don’t require change every single day, but rather a consistent change over time. A moving average. Don’t worry about the day to day shifts as much as the weekly action.
5. Allow consolidation. For trends to continue, they need small retracements. They can’t have “exhaustion.” This means that there needs to be time to consolidate the changes – this could be “resting” in your exercise program, or it could be some time out from your work. Nothing goes up linearly without at least a pause.

Trends are real, and change is there to be made. The hard part is organising steps 1-3, and then being patient enough to “see it through” in steps 4 and 5.