Cognitive Analysis – The 4th And Final Frontier of Trading
Webinar Notice – Thursday, May 8, 1 p.m. ET
I’ll open today’s trading lesson with a brief invitation: on May 8 at 1 pm ET I’m hosting a live, no-cost session on Cognitive Analysis, the new discipline that is redefining trading and investing.
Larry Connors' Trading Lesson of The Day | May 6, 2025
The dream of every trader is to have more knowledge than everyone else. In the financial markets the smart prey on the weak.
Think of the Citadel and Renaissance traders vs the Robinhood traders – no one said the financial markets are a fair fight.
Even better is to have this knowledge before everyone else (legally, of course).
In the 1990’s it was sitting in front of your Bloomberg terminal and getting news (including earnings releases) up to 3 minutes before the rest of the trading world.
It was the closest thing to printing money – all because Dow Jones controlled the financial news market in the early to mid 90’s.
Bloomberg consistently beat Dow Jones to the punch, giving their subscribers (of which I was one) huge advantages in getting orders in minutes before the big money saw it.
Printing money was an understatement and this lasted for years.
Today, the equivalent opportunity exists – except it’s far larger.
While the majority of the trading and investment world is using the same outdated trading and investing techniques that have little to no edge any longer – AI has emerged, and it contains the largest, most robust edges I’ve seen in my 44 year professional career.
The edge is available to anyone who learns to extract it—yet few have the framework.
What AI can do will change the world of trading and investing forever – especially for those who know how to apply it.
It’s even better than getting news three minutes before everyone else because it’s far more scalable and the edges will likely be there for years, possibly decades.
AI and Cognitive Analysis - The Fourth and Definitive Discipline
I started trading in college in the late 1970s and then began my career at Merrill Lynch in 1982.
Over the past four decades, I’ve had the opportunity to experience incredible changes, advancements, and growth in the financial markets.
Seismic shifts in technology combined with massive expansion into many new trading areas have fueled this growth.
Options? There were only a handful in 1982. And they all expired quarterly!
Online trading? No such thing. We called in trades (that means we picked up a land phone, called our broker or Prime Broker, placed the order, often waited for minutes and sometimes longer to even know if we were filled, and we still managed to make money.
ETFs? SPY was first in 1992 and got almost no traction – QQQ wasn’t even brought out until seven years later. The mutual fund industry (including the brokers selling the mutual funds) did its best to stop ETFs from scaling up. Beginning in 2006 this began to change – 14 years after the launch of SPY.
Electronic trading, first introduced in the 1990s, was legally challenged as a form of “cheating” at the time. This technology breakthrough soon led to the onset of HFT, which dominates the markets today.
The VIX? It was created in 1989 as a response to the market crash of 1987. It was completely unknown – only Bloomberg had the data on their terminal. I believe I was one of the first to publish strategies around it to time the S&P in 1995.
Want to trade VIX directly? You had to wait until the next century before futures were even offered!
Quants? Top of the food chain today. Brilliant individuals.
In the 1990s, quants were derogatorily referred to as “systems vendors”.
No one who is legitimate can put rules and data to trade the market!
These same people who were threatened by data driven systematic trading are the same today who draw squiggly lines and tell us where prices are going over the next weeks, months and and years.
Crypto trading? They literally couldn’t even give Bitcoin away in 2010.
This list of advancements is endless. It’s made up of incredible progress, capitalism at its best (the government owned the futures exchanges until the early 2000s) and ingenuity.
The advancements the trading and investment industry has seen is immense and with this progress brought incredible opportunities. Many who took part in this progress made fortunes along the way. They pounced on the opportunity, and ran with it.
Here’s Today’s Opportunity and It’s the Largest In History
- – Fundamental Analysis – Over 65% of large-cap fundamental funds trailed the S&P 500 in 2024 (SPIVA).
- – Technical Analysis – Technical/Trend – Barclay CTA/Managed-Futures Index. 8.22% annualized since inception; 3.5% in 2024.
- – Quantitative Analysis – According to HFR Indices (HFRI) “Quant Systematic Diversified Funds” returned just 1.9% annualized over the last decade.
Introducing Cognitive Analysis - The Fourth and Definitive Frontier of Analysis
Today, you have the exact same opportunity to get there early in a new area, years ahead of most everyone else.
And that’s with the new emerging discipline – Cognitive Analysis.
What Is Cognitive Analysis?
Cognitive Analysis signals a structural break in the industry’s knowledge and execution curve—much like the shift from ticker tape to electronic trading.
Engines and systems that learn and re-optimize in real time replace static research cycles, so capital now compounds at an exponential rather than linear rate.
Traders who adopt Cognitive Analysis aren’t just a step ahead; they operate on a fundamentally different growth trajectory.
I’m confident of this and I’m already seeing this – the competitive landscape will split between those who embrace self-upgrading cognition and those who cling to slower, outdated methods.
Cognitive Analysis is vast. So vast that it’s larger than Fundamental Analysis, Technical Analysis, and Quantitative Analysis combined.
And those who don’t know how to apply it stand no chance against those who do.
Below are a handful of things you can do with Cognitive Analysis – all without teams of 6, 7 and 8-figure professionals working under you.
This list is just the beginning, ranging from trading idea generation, building high performing strategies, optimizing your execution, analyzing risk, all the way up to improving your trading performance.
All this requires is your knowledge, augmented with the immense knowledge inside of AI, along with you knowing how to properly extract this valuable information.
Unlike Fundamental, Technical and Quantitative Analysis, there’s unlimited upside here for you.
Webinar Notice – Thursday, May 8, 1 p.m. ET
On May 8 at 1 pm ET I’m hosting a live, no-cost session on Cognitive Analysis, the new discipline that is redefining trading and investing.
75 Ways Cognitive Analysis and AI Elevate Your Trading
1. Reads decades of price, volume, and alternative data in seconds, revealing patterns humans overlook.
2. Translates academic papers into plain-English briefs.
3. Extracts trading rules from any study; within months, it will accurately auto-code a back-test for you.
4. Scores each study’s robustness, flagging data-mined results.
5. Builds and updates clean charts, tables, and dashboards directly from raw data.
6. Calculates and interprets indicators such as RSI, Bollinger Bands, and ConnorsRSI.
7. Aligns multiple time-frames—daily, hourly, intraday—in a single view.
8. Summarises earnings calls, capturing tone and guidance in minutes.
9. Parses SEC and global filings, flagging new risks or growth clues overnight.
10. Monitors news, social media, and option flow 24/7, alerting you to price-moving events.
11. Blends dozens of signals into a single, real-time health score for any asset.
12. Learns your preferred chart templates and applies them automatically at the open.
13. Recommends fresh trade ideas that mirror past winners and avoid past losers.
14. Generates full back-tests from a plain-language prompt (available mid/late-2025).
15. Performs walk-forward validation to test durability across market regimes.
16. Optimises entry and exit rules for the best reward-to-risk profile.
17. Calculates position size via Kelly, half-Kelly, or fixed-fraction instantly.
18. Produces forward-looking expectancy tables showing win rate and average gain/loss.
19. Suggests simple, cost-effective hedges—puts, collars, or verticals.
20. Designs option structures that cap risk yet retain upside.
21. Prices complex spreads and compares edges across expirations.
22. Detects volatility arbitrage and skew shifts ahead of earnings.
23. Warns when portfolio correlation drifts or crowding appears.
24. Spots early factor rotations among value, growth, size, and quality.
25. Quantifies macro-data surprises for rapid positioning.
26. Analyzes central-bank speeches for hawkish or dovish tilt within minutes.
27. Detects credit-market stress before it manifests in equities.
28. Suggests ETF pairs or futures-curve trades when mispricing emerges.
29. Adjusts stop levels dynamically as volatility changes.
30. Recommends alternate tickers when target liquidity is thin.
31. Streams real-time P&L, risk, and key news on a personalised dashboard.
32. Alerts you instantly when any position breaches predefined risk limits.
33. Logs every trade rationale in natural language for future review.
34. Reminds you when live conditions diverge from the original thesis.
35. Detects behavioural slips—revenge trades, oversizing—directly from order flow.
36. Issues discipline prompts (e.g., “step away, reset size”) when rules break.
37. Runs end-of-day self-reviews scoring plan adherence and emotional tone.
38. Schedules micro-lessons to correct yesterday’s mistakes.
39. Provides guided focus or breathing drills before high-volatility sessions.
40. Measures fatigue and over-trading impact on hit rate.
41. Sets up risk-free simulator sessions that mirror live spreads.
42. Creates trade-idea checklists covering edge, catalyst, risk, and exit.
43. Maintains an idea vault, resurfacing concepts when market conditions align.
44. Flags event conflicts—earnings, ex-dividends, Fed meetings—against open positions.
45. Generates a daily at-a-glance sheet with key news, P&L, top risk, and one improvement tip.
46. Audits brokerage statements for hidden fees and routing slippage.
47. Writes scripts for routine tasks, such as rolling covered calls at delta 0.45.
48. Identifies high-yield yet safe cash equivalents for idle margin.
49. Produces presentation-ready chart images in a single click.
50. Translates research notes into multiple languages for global teams.
51. Aggregates broker research and newsletters into one de-duplicated daily brief.
52. Benchmarks your returns to peer groups, emphasising process over raw P&L.
53. Surfaces long-term technology themes from patents, R&D spend, and venture flows.
54. Maps the companies best positioned to benefit from each breakthrough.
55. Tracks theme momentum and warns when hype exceeds adoption.
56. Monitors insider buying and institutional ownership shifts for conviction checks.
57. Tracks short-interest spikes that often precede volatility explosions.
58. Combines option flow, dark-pool prints, and 13D filings into a single heat map.
59. Builds probability trees for merger-arbitrage spreads and sum-of-parts valuations.
60. Reads patent databases to uncover firms with hidden moats.
61. Scores currencies on carry, momentum, and value, then ranks tradable pairs.
62. Maps commodity inventory swings and weather anomalies to futures hedges.
63. Constructs custom indices (e.g., AI chipmakers) and rebalances them rule-based.
64. Projects ETF cash-flow impact on underlying names after major re-weights.
65. Detects forced liquidations from risk-parity or vol-target funds in real time.
66. Suggests covered-call ladders to monetise sideways markets efficiently.
67. Generates voice summaries you can review while commuting.
68. Schedules automated portfolio rebalancing and confirms completion.
69. Integrates with smart-home devices for immediate verbal alerts when stops trigger.
70. Creates synthetic data to stress-test strategies in rare crash scenarios.
71. Detects data leakage and proposes cleaner feature engineering.
72. Tunes hyper-parameters with Bayesian optimization for more robust models.
73. Translates and refactors code between Python, R, C++, and EasyLanguage (mature by Q4-2025).
74. Suggests cheaper alternative data sources with comparable signal quality.
75. Learns your objectives and refines all services daily—compounding your edge even while you sleep.
Learning how to apply Cognitive Analysis to your trading and investing is the reason why it’s the fourth and final frontier in the markets.
Today is Day One. And it only gets better from here.
Webinar Notice – Thursday, May 8, 1 p.m. ET
On May 8 at 1 pm ET I’m hosting a live, no-cost session on Cognitive Analysis, the new discipline that is redefining trading and investing.
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