Tag: Psychology

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Dan Gilbert: Why We Make Bad Decisions

Mr. Gilbert tells us how we keep making bad decisions even though we know clearly how not to. It is one of the original Ted Talks that really drive home the difficulties of making sound decisions that involve both time and money.

Note: Be reminded that it is a long talk at 34 minutes.

Perception matters.

Most of the time, it is our worse enemy in trading.

It takes practice to hammer into our mind making rational decisions only in trading.

It takes more than just practice to be patient in trading. Not an easy task at all.

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Kelly McGonigal: How To Make Stress Your Friend

Ms. McGonigal talks about stress and how new findings in human response to stress leading to overhaul of our understanding of stress.

Ms. Gonigal mentioned courage which is really the main theme of the video.

Courage is known to be a born with characteristics. Some prefer calling it a potential only because it still takes effort to bring out the courage. What Ms. Gonigal says is that courage can be developed through the willingness to connect with other people and the willingness to feel what others feel.

I am bringing this up because traders are often facing adverse scenarios. Many people simply paralyzed when they are facing sudden change in the market environment that their logical self just couldn’t keep up. Courageous people, however, has the advantage of accepting the situation and move on.

I am not saying that trading with so much emotional swings is a good thing. I am saying that if the market can inflict emotional swings on you so badly, you need courage to overcome the adversities. What Ms. McGonigal says is a way out to reprogram our mind so that we can handle stressful environment better without the innate advantage.

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Julia Galef: Look at a Problem as an Outsider

Another way in looking at Ms. Galef’s other video on The Sunk Costs Fallacy.

Being a trader, if you find that you are failing to make money in trading, or that you could not improve your performance further. You need to take a step back and really evaluate yourself as an observer or an outsider.

Sometimes there is only so much you can do to improve on a trading method that has limited potential.

Think of what you have missed during the day.

Have you written down any notes about them yet?

Do you notice that some of them recurring yet you are not comfortable in trading them?

Why you are not comfortable?

Can you make yourself comfortable by trading them with sim trading or confirm your gut feeling or observations with backtesting?

Think outside of what you think you know at this point.

There is always room for improvement in our lives.

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