How you really make (trading) decision

28/02/2014 | By | Reply More

If you haven’t seen this episode of Horizon it is worth a watch: –

It is titled, ‘How you really make decisions’

http://www.bbc.co.uk/iplayer/episode/b03wyr3c/Horizon_20132014_How_You_Really_Make_Decisions/

I’ve used some of the examples in this episode in my courses from time to time.

I became interested in sub-optimal behaviour when I started working out how to win the football pools. I figured that while there was an inbuilt edge against me in he market, most people wouldn’t use optimal behaviour to place their bets and that was going to be part of my edge.

When I went into financial markets I found exactly the same thing. The stock market turned out to be a strange place, one where people are more likely to buy stuff the more expensive it gets and sell it when it gets cheaper. The opposite of what you would think.

When I started teaching people to trade on exchanges I came across another strange characteristic. That is you can give a person detailed exact, specific steps to perform an action that will work. But they often still, or can’t, actually act on it. The human mind sure is a fascinating subject!

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Category: Psychology

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