Trading Psychology : Wisdom of crowds

Trading is often about how to take the appropriate risk without exposing yourself to very human flaws.
Post Reply
User avatar
Euler
Posts: 15625
Joined: Wed Nov 10, 2010 1:39 pm
Location: Bet Angel HQ
Contact:

Fri Dec 01, 2017 4:45 pm

Great piece of analysis on good and back decisions by groups

https://www.ted.com/talks/mariano_sigma ... _decisions

User avatar
ShaunWhite
Posts: 2918
Joined: Sat Sep 03, 2016 3:42 am

Fri Dec 01, 2017 5:45 pm

A crowd's wisdom is proportional to the accuracy of their beliefs.

User avatar
marksmeets302
Posts: 500
Joined: Thu Dec 10, 2009 4:37 pm

Fri Dec 01, 2017 8:37 pm

Cool video. My first thought was that social media makes it easy to destroy collective wisdom; someone with enough followers can polarize a (large) group.
I also liked the part on "robust average". Looks similar to taking the median instead of the average.

Trader Pat
Posts: 154
Joined: Tue Oct 25, 2016 12:50 pm

Fri Dec 01, 2017 8:41 pm

Wisdom of Crowds can quickly become Stupidity of Crowds when you throw in emotion, politics being the prime example.

User avatar
Euler
Posts: 15625
Joined: Wed Nov 10, 2010 1:39 pm
Location: Bet Angel HQ
Contact:

Fri Dec 01, 2017 8:46 pm

I've been listening to 'Superforecasting' recently and there are some great examples of terrible groupthink in there. Mainly driven by emotion.

I find it fascinating that people are so gullible on social media.

Trader Pat
Posts: 154
Joined: Tue Oct 25, 2016 12:50 pm

Fri Dec 01, 2017 9:58 pm

I've got that book on my To Read list!

Gullible and lazy. Like you said some people on social media will believe anything but more amazing to me is how some people don't question what they're being told. All it take is 2 minutes to check the facts on something you hear about online but I suppose they want to believe it or else they surely would. And even worse than that is when people won't even entertain the possibilty they could be wrong even when the evidence is mounting that they are. When they get to that point its almost a kind of religious fundamentalism, they dont need to prove they're beliefs anymore its up to everyone else to disprove them.

User avatar
northbound
Posts: 387
Joined: Mon Mar 20, 2017 11:22 pm

Fri Dec 01, 2017 10:17 pm

Trader Pat wrote:
Fri Dec 01, 2017 9:58 pm
And even worse than that is when people won't even entertain the possibilty they could be wrong even when the evidence is mounting that they are.
I’m reading a great book about it, it’s called Black Box Thinking, by Matthew Syed.

User avatar
marksmeets302
Posts: 500
Joined: Thu Dec 10, 2009 4:37 pm

Mon Dec 11, 2017 1:44 pm

Tony Robbins interviews Ray Dalio: https://www.tonyrobbins.com/podcasts/su ... llionaire/. Dalio's take on how to make use of wisdom of crowds, calls it a meritocracy. In short: listen to a mix of knowledgeable people, preferably ones with opposing views. Try to reach consensus and if that doesn't work have a way to break the tie. Rest of the interview is worth listening to as well, although you will need to reserve some time for it, 2 hours in total.

User avatar
Euler
Posts: 15625
Joined: Wed Nov 10, 2010 1:39 pm
Location: Bet Angel HQ
Contact:

Wed Dec 20, 2017 8:42 am

Here is a good description on the mechanics of crowd wisdom

https://www.youtube.com/watch?v=XKH5ITx6AAk

bobs71
Posts: 50
Joined: Sun Nov 20, 2016 10:22 pm

Sat Dec 23, 2017 11:15 am

Trader Pat wrote:
Fri Dec 01, 2017 9:58 pm
I've got that book on my To Read list!
Trader Pat - Superforecasting - Pdf - https://www.dropbox.com/s/fmslj4stkgsks ... g.pdf?dl=0

Post Reply

Return to “Trading Psychology”

  • Information
  • Who is online

    Users browsing this forum: No registered users and 2 guests