Authors DoejiStar
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Some reflections on trading psychology...
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Trading is as simple as "do you think it will go up or do you think it will go down", yet this is one of the hardest jobs I've ever experienced and I've been lucky (or so I'm told) to have experienced a few - musician, pe associate, baker, biz owner, insurance underwriter.
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But with this simplistic binary proposition comes a tremendous amount of pitfalls which is well explained imv by Daniel Kahneman’s book “thinking fast and slow”, that illustrates a lot of why traders succumb to these pitfalls time and time again...
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And that is, Humans are innately horrible (horrible) traders. And it's no wonder why trading has an extremely low success rate. As I've come to realise from reading that book some years ago, we - Humans, tend be risk-averse when winning, that is to say...
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we tend to take our profits or whatever we have gained quickly; and tend to be risk-seeking when losing in that we tend to let our losses or whatever we may lose a chance (or give more risk) to recoup what we could end up losing.
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Was out tonight - great cocktails whiskey wine, all alone and didn't indulge in the people or beautiful women around me, instead I jotted down some notes after reflecting on trading psychology quite a bit this past week. Will expand on this once I come out of my daze...
— DoejiStar (@DoejiStar) December 12, 2020
Trading is as simple as "do you think it will go up or do you think it will go down", yet this is one of the hardest jobs I've ever experienced and I've been lucky (or so I'm told) to have experienced a few - musician, pe associate, baker, biz owner, insurance underwriter.
2/
But with this simplistic binary proposition comes a tremendous amount of pitfalls which is well explained imv by Daniel Kahneman’s book “thinking fast and slow”, that illustrates a lot of why traders succumb to these pitfalls time and time again...
3/
And that is, Humans are innately horrible (horrible) traders. And it's no wonder why trading has an extremely low success rate. As I've come to realise from reading that book some years ago, we - Humans, tend be risk-averse when winning, that is to say...
4/
we tend to take our profits or whatever we have gained quickly; and tend to be risk-seeking when losing in that we tend to let our losses or whatever we may lose a chance (or give more risk) to recoup what we could end up losing.
5/