The Power of Negative Thinking

[Iron]

http://online.wsj.com/article/SB1000142 ... cle_forsub

I thought this bit was particularly relevant to trading:

'Instead of focusing on the possibility of spectacular rewards from a venture, ask how great the loss would be if it failed. If the potential loss seems tolerable, take the next step.'

Jeff

[Photon]

We previosly had power of positive thinking and now power of negative thinking, it doesn't make sense. We, humans, have natural bias to positive thinking, just ask about likelihood of divorce to anybody getting married and the answer you will get will be lot different to true probability.

As a general rule of thumb you need to be positive 80% of the time and 20% negative looking out for a disaster not that you can predict it.

But I wouldn't use any of this for your trading as you need to be in control of your emotions rather than being positive or negative.

[Euler]

Wrong headline, this is basically talking about the minimax theorem: -

http://en.wikipedia.org/wiki/Minimax

Postive people see opportunties and negative people see problems, it's as simple as that. I would have missed pretty much all the 'luck' I have had in life if I hadn't actively been looking for it.

[Iron]

We previosly had power of positive thinking and now power of negative thinking, it doesn't make sense. We, humans, have natural bias to positive thinking, just ask about likelihood of divorce to anybody getting married and the answer you will get will be lot different to true probability.

That's true, although equally people often talk themselves out of doing stuff by saying 'it won't work, so there's no point in trying'. And I bet you don't know many people who would shrug their shoulders and smile if they stubbed their toe!

But I wouldn't use any of this for your trading as you need to be in control of your emotions rather than being positive or negative.

But surely this stuff is relevant to managing your emotions. Negative self-talk can lead to negative emotions, for example.

Jeff

[Iron]

I think there is a third way - being neither negative nor positive, and instead adopting the Zen approach of seeing things as they are, and responding accordingly (ie treating good news and bad news as mere information, and using it to make decisions, rather than being affected by it emotionally). Easier said than done, I know!

Jeff