http://www.bbc.co.uk/news/health-15214080
Might explain why people gamble, even though the odds are stacked against them...
Jeff
Brain 'rejects negative thoughts'
I've been spending a lot of time in the office recently looking at why you can give two people a net +ve strategy and see one fail and one succeed. It seems to boil down to the fear of loss.
I sat one losing person down and put them in practice mode and they did OK. They then traded on their own account and it was a mess (I ended up shouting at them). I then put them back in practice mode and then felt comfortable again and did better. It was then that I told them it was a fake practice mode and they were actually in the market for real.
I videoed what they were doing and basically the change in behaviour was around the time when a key decision was due. When they used their 'own' money they often scratched a trade that was quite likely to be a profitable one and hung on too long when in a losing position. An invisible hand was changing what they did and the only common denominator was whether they were using real money or not. (Or thought they were using real money or not).
The research continues!
I'm trying to find a process or method that helps people overcome these fears / habits.
I sat one losing person down and put them in practice mode and they did OK. They then traded on their own account and it was a mess (I ended up shouting at them). I then put them back in practice mode and then felt comfortable again and did better. It was then that I told them it was a fake practice mode and they were actually in the market for real.
I videoed what they were doing and basically the change in behaviour was around the time when a key decision was due. When they used their 'own' money they often scratched a trade that was quite likely to be a profitable one and hung on too long when in a losing position. An invisible hand was changing what they did and the only common denominator was whether they were using real money or not. (Or thought they were using real money or not).
The research continues!
I'm trying to find a process or method that helps people overcome these fears / habits.
The key may lie in methods like meditation and hypnosis, which short-circuit the normal 'flight or fight' response, and enable people to make more rational choices.Euler wrote: I'm trying to find a process or method that helps people overcome these fears / habits.
The problem with such methods is that it's incredibly easy to put off doing them, and the old cliche of 'tomorrow never comes' may apply. Firsly, they involve mental effort (even though, ironically, they induce relaxation), and humans prefer comfort to effort. And secondly, it's easy to get sidetracked when you're trying to quieten your mind (as Quinny pointed out in this excellent post: viewtopic.php?f=2&t=4109&hilit=definitely+improve).
So maybe the solution is to force yourself to make a habit of living in the moment - to turn it from a should (as in 'I really should lose weight - one day I'll get around to it'), to a must (as in 'I NEED to do this, and I WILL!).
If people find the thought of sitting alone chanting 'Ommm' sounds tedious, I'd recommend this exercise: http://www.highlysensitivesouls.com/art ... gpages.htm
Apart from being a great meditation exercise, it helps to explore issues in your life that you need to find solutions for. I actually used it last night to clarify my thoughts regarding trading. Just banging everything down on paper is far better than churning thoughts over and over inside your head, making no progress...
Jeff
Last edited by Iron on Tue Oct 11, 2011 10:50 am, edited 1 time in total.
Self Hypnosis Applied to Traders - http://www.youtube.com/watch?v=PpcpeZrwvSs
I think the solution is a bit easier. During my course last Tuesday I sat down on a market for five mintues to demonstrate what was possible and did 94 trades in total, for 47 round trips. All I did was follow a simple set of rules and one action led to the next action on each.
I wouldn't expect a newbie to be able to do that, as it takes some practice; but I never feel any anxiety while doing it as I always know what my next action is.
I wouldn't expect a newbie to be able to do that, as it takes some practice; but I never feel any anxiety while doing it as I always know what my next action is.
That begs the question of why.Euler wrote:I never feel any anxiety while doing it as I always know what my next action is.
Maybe it's because you're confident of what you're doing, so you can accept the risks.
And perhaps it's because you've traded for so many years with positive results that it's no big deal to you.
I remember you once writing that you were terrified when you first put a grand into the market. Similarly, a newbie might feel frightened about putting a small amount into the market - perhaps not because he can't afford to lose the money, but because he's worried about falling flat on his face. Relaxation techniques can help the brain accept losses or potential losses as just things that happen, without the emotional baggage. And learning to relax can have lots of wider benefits, including helping you to keep your cool with floundering newbies!
Jeff