BC TRADING
Saved by @SteveeRogerr

Dunning-Kruger Effect 101

In a year when the markets have minted many new self-proclaimed geniuses, it is worth remembering the Dunning-Kruger Effect.

But what is the Dunning-Kruger Effect and how does it work?

Here's Dunning-Kruger Effect 101!

👇👇👇

 1/ First, a few definitions.

The Dunning-Kruger Effect is a cognitive bias in which people with low ability at a given task are prone to overestimate their ability at that task.

Put simply, humans are notoriously incapable of objective evaluation of their competency levels.
2/ The cognitive bias was first identified by psychologists David Dunning and Justin Kruger in a 1999 study.

Their paper, entitled Unskilled and Unaware of It, summarized, "People tend to hold overly favorable views of their abilities in many social and intellectual domains."
3/ The two men had studied the bizarre case of McArthur Wheeler, a 5'6" 270lb bank robber who was swiftly caught after robbing two banks in broad daylight.

He hadn't worn a mask.

Instead, he had put lemon juice on his face, believing it would make him invisible to cameras.
4/ Wheeler was aware that lemon juice was used as invisible ink, so (incorrectly) inferred that it could be used to make himself invisible to security cameras.

Even after he was caught, he was legitimately incredulous that his plan with the lemon juice hadn't worked.
5/ Dunning and Kruger studied whether the least skilled are the most overconfident.

Their finding: the worst performers consistently overestimated their abilities relative to others.

Let's look at a few examples of this bias in action and how you can avoid its pitfalls.
6/ In investing?

As the saying goes, "everyone is a genius in a bull market."

When markets are ripping and your portfolio seems to grow by the day, many fall victim to the Dunning-Kruger Effect.

We may wrongly attribute this performance to our innate talent as investors.
7/ In politics?

With politics, intellectual humility is an aberration, not the norm.

Politicians espouse policy ideas with great confidence even if they have a weak handle of the details.

It's not shocking that we see Cobra Effects in the policy realm. https://t.co/gKuHcJTjW7
8/ In business?

Everyone has had that one boss - the know-it-all who actually knows very little.

These bosses (who typically get stuck in middle management) hold back organizations from high performance.

They are easy to spot - we all know who they are.

Beware this boss!
9/ But while we can all rail against the politicians, bosses, or public figures who seem to epitomize the Dunning-Kruger Effect, it is important to recognize that, as humans, we are all prone to this cognitive bias!

So how do we avoid it?

Here are a few strategies.

👇👇👇
10/ Identify your Circle of Competence.

The Circle of Competence is the set of topic areas that align with a person's expertise.

Be ruthless in identifying and protecting the boundaries of your Circle of Competence.

Hint: it's usually smaller than you think.
11/ Get comfortable with, "I don't know."

Most people have an inherent discomfort with saying, "I don't know."

Change that. Embrace what you don't know.

The world would be a much better, more efficient place if we stripped out the fluff and cut to the "I don't know" chase.
12/ Be a first principles thinker.

Think you know something? Challenge yourself, your reasoning, and your assumptions as a matter of practice.

It's uncomfortable, but it is also essential to creating non-linear outcomes. https://t.co/31EZVZDLM1
13/ As Charlie Munger said, "It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent."

Know your competencies, focus on them.

Know your incompetencies, avoid (or outsource) them.
14/ "It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so."

So the next time you catch yourself marveling at your skill at a task, remember the Dunning-Kruger Effect and the strategies for avoiding it.
15/ That was Dunning-Kruger Effect 101. I hope you found it useful.

For more on this topic, check out the resources below:

https://t.co/5TpIxyWjCD

https://t.co/mYfcPw2rcH

https://t.co/9lmroooQHn

https://t.co/2rlAXpPGt6

https://t.co/sAqJLE1gJi

https://t.co/5vAlRTbi5u
16/ Special thank you to the intimidatingly-talented @jackbutcher of @visualizevalue and @value for the incredible visuals.

For more educational threads on business, money, finance, and economics, follow me on Twitter and check out my meta-thread below. https://t.co/53UhhfzIcp

More from Sahil Bloom

Sahil Bloom
Sahil Bloom
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Warren Buffett is a treasure trove of wisdom.

But contrary to what you have been told, most of it has nothing to do with investing.

10 powerful lessons for life from the Oracle of Omaha:

Wait For A Juicy Pitch

“You don't have to swing at everything - you can wait for your pitch."

Life doesn’t reward you for the number of swings you take.

Focus on identifying the juiciest pitch.

When it comes, swing hard and don’t miss it.

Just Stop Digging

“The most important thing to do if you find yourself in a hole is to stop digging."

When things aren’t working, change course and try something different.

Be nimble. Be agile.

When you find yourself at the bottom of a hole, stop digging and climb out of it.

Exploit Disconnects

“Price is what you pay. Value is what you get.”

Seek out situations where there is a clear disconnect between price and value.

This applies to investing, but it’s more broadly a mental model for life.

Identify disconnects. Exploit them to your advantage.

Be Contrarian

“Be fearful when others are greedy and greedy when others are fearful.”

Following the crowd is easy, but it can be a trap.

Learn to think independently. Come to your own decisions. Develop your own mental models.

Your unique perspectives are your superpower.
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Sahil Bloom
Sahil Bloom
@SahilBloom
From a young age, we are taught to view the world as black and white.

But many of life’s most important truths appear contradictory on the surface.

THREAD: 15 powerful paradoxes (on growth, business, careers, and life):

Sprezzatura (“Studied Carelessness”)

You have to put in more effort to make something appear effortless.

Effortless, elegant performances are often the result of a large volume of effortful, gritty practice.

Simple is not simple.

Slow Down to Speed Up

Want to speed up? Try slowing down.

Slowing down gives you the time to be deliberate with your actions.

You can focus, gather energy, and deploy your resources more efficiently.

It allows you to focus on leverage and ROI.

Move slow to move fast.

Learn More to Know Less

The wisdom paradox - the more you learn, the more you are exposed to the immense unknown.

This should be empowering, not frightening.

“The more I learn, the more I realize how much I don't know.” - Albert Einstein

Embrace lifelong learning.


Shrink to Grow

Growth is never linear.

In order to grow, sometimes you need to shrink.

Shedding deadweight may feel like a step back, but it is a necessity for long-term growth.

This principle applies to your career, startup, or life.

One step back for two steps forward.
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Sahil Bloom
Sahil Bloom
@SahilBloom
In 1637, the Dutch Republic erupted into a speculative fever over an unlikely item...the tulip.

Tulip Mania has become a legend synonymous with market euphoria and bubbles. But is this tale all it's cracked up to be?

Who's up for a story?

👇👇👇


1/ The tulip is a spring-blooming flower native to the valleys of the Tien Shan Mountains in Central Asia.

It is believed to have been introduced to Europe in 1554, when an ambassador of the Holy Roman Emperor sent tulip bulbs and seeds to Vienna from the Ottoman Empire.


2/ Tulips gained in popularity as people were attracted to their rich color and ability to grow in sub-optimal conditions.

They soon became a coveted status symbol for the wealthy.

The Semper Augustus, with its colorful, flame-like streaks, was the most desired of them all.


3/ By the early 1600s, the Dutch Republic was entering a golden age.

Many financial innovations popped up during this time - the first stock exchange, for example.

But it was another financial innovation that would propel tulips into historical lore: the futures contract.

4/ As tulips grow slowly and may take several years to bloom, paper contracts were written that entitled the buyer to the future tulips.

These contracts were freely-traded.

So in addition to the physical market for tulip bulbs, a thriving paper market was established.
HISTORY
Sahil Bloom
Sahil Bloom
@SahilBloom
Powerful concepts everyone should know (to understand the world):

The Paradox of Advice

Taking more advice leaves you less well-equipped.

Most advice sucks.

It's well-intentioned, but it's dangerous to use someone else's map of reality to navigate yours.

Winners learn to filter and selectively implement—take the signal, skip the noise.

The Feynman Technique

To learn anything:

Step 1: Identify a topic
Step 2: Try to explain it to a 5-year-old
Step 3: Study to fill in knowledge gaps
Step 4: Organize, convey, and review

True genius is the ability to simplify, not complicate.

Simple is beautiful.

Fundamental Attribution Error

Humans tend to:

(1) Attribute someone else's actions to their character—and not to their situation or context.

(2) Attribute our actions to our situation and context—and not to our character.

We cut ourselves a break, but hold others accountable.

Time Billionaire

Time is our most precious asset.

When you're young, you are a "time billionaire”—rich with time.

Too many people fail to realize the value of this asset until it is gone.

Treat time as your ultimate currency—it’s all you have and you can never get it back.
PRINCIPLES
Sahil Bloom
Sahil Bloom
@SahilBloom
22 ideas from 2022.

The top 1% of ideas I encountered:

The Feynman Technique

Four steps to learn anything:

(1) Identify a topic
(2) Try to explain it to a child
(3) Study to fill in gaps
(4) Organize, convey, and review

True genius is the ability to simplify, not complicate.

Simple is beautiful.

Visualizing Time

1. Family time is limited—cherish it.

2. Friend time is limited—prioritize real ones.

3. Partner time is significant—never settle.

4. Children time is precious—be present.

5. Coworker time is significant—find energy.

6. Alone time is highest—love yourself.


Darkest Hour Friends

Most of your friends aren’t really your friends. They‘re just along for the ride when it’s fun or valuable.

The real ones are there for you when it’s neither—there for you in your darkest hour.

Treasure your Darkest Hour Friends.

Be one to someone else.

The Two-Day Rule

How to make new habits stick:

With whatever habit you're trying to build, never allow yourself to skip more than one day in a row.

Creates forward progress—but allows for the vagaries of life to enter without derailing momentum.
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Aditya Todmal
Aditya Todmal
@AdityaTodmal
12 TRADING SETUPS used by professional traders:🧵

Collaborated with @niki_poojary

Here's what you'll learn in this thread:

1. Capture Overnight Theta Decay
2. Trading Opening Range Breakouts
3. Reversal Trading Setups
4. Selling strangles and straddles in Bank Nifty
6. NR4 + IB
7. NR 21-Vwap Strategy

Let's dive in ↓

1/ STBT option Selling (Positional Setup):

The setup uses price action to sell options for overnight theta decay.

Check Bank Nifty at 3:15 everyday.

Sell directional credit spreads with capped


@jigspatel1988 2/ Selling Strangles in Bank Nifty based on Open Interest Data

Don't trade till 9:45 Am.

Identify the highest OI on puts and calls.

Check combined premium and put a stop on individual


@jigspatel1988 3/ Open Drive (Intraday)

This is an opening range breakout setup with a few conditions.

To be used when the market opens above yesterday's day high

or Below yesterday's day's
OPTIONSLEARNINGS , TRADING , ALL
Trader knight
Trader knight
@Traderknight007
"A trend once established, is more likely to continue than it is to reverse"

A thread on Trend (Market structure)-


A trend is a path of least resistance, basically the side where the smart money is betting upon.

And our work is to be on their side, to make some money.

Why do we use trend?

In an uptrend, the sum of the rallies will always be greater than the sum of the declines.

In a downtrend, the sum of the declines will always be greater than the sum of the rallies.

How to Find the trend?

There are 3 methods which one can use-

1. Swing points method.
2. Moving averages.
3. Trend lines, channels.

1. Trend identification by using swing points-

• UPTREND in simple words - Higher highs, higher lows

• DOWNTREND in simple words - lower lows, lower highs.


• Flat trend - The price stays in a range
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Trader knight
Trader knight
@Traderknight007
A thread on Pyramiding-


What is pyramiding?

In pyramiding we add on to a position when it is going in our direction. Its basically opposite of averaging down.

MOMENTUM - Success of a pyramiding trade depend on this ingredient, the more the momentum the better pyramiding.


There are many way to enter and exit in a stock-

1. ALL IN - ALL OUT
2. ALL IN - SCALE OUT
3. SCALE IN - SCALE OUT
4. SCALE IN - ALL OUT ( I use this one)

Why traders use Pyramiding ?

More than anything what pyramiding do is keep your losers small and your winners - Big.

Pyramiding in my view keeps your dd smaller as your losers are very small because you enters with only a fraction of what you would have entered Normally.

BUT, not necessarily it should be more profitable than ALL IN- ALL OUT, Where one enters all at once and sell all at once.

HOW TO DO PYRAMIDING-

There are various methods which are used by traders for pyramiding ,while keeping the basic concept of adding onto the strength.

1. PYRAMIDING AND TRAILING BASED UPON STRUCTURE-

In this method we scale in or pyramid the qty when the stock breaks above
TRADING
Nikita Poojary
Nikita Poojary
@niki_poojary
#NIFTY

Bearish engulfing on monthly or bullish harami on Weekly , which one will play out?

Outlook for the week Jan 2 - 6, 2022.

THREAD: Deconstructing NIFTY on 5 different TF's.

#NIFTY

1. Monthly TF:

• Although the structure in monthly TF is of HH-HL, December monthly candle is a more of a bearish engulfing.

• However it is exactly at the support

• 17800-18000 looks like a strong support.


#NIFTY

2. Weekly TF:

• 17800- 1800 used to be a resistance in April & August 2022.

• However post BO of those levels, they might act as an immediate support.

• Current weekly candle is closer to the support (erstwhile resistance)


#NIFTY

3. Daily TF:

• After a sharp vertical fall, we expected a buying momentum

• Also Nifty filled the Gap.

• Strong support at 17800


#NIFTY

4. Hourly TF:

Moving within the rising channel, albiet the channel is quite steep.
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Mohit Sharma
Mohit Sharma
@mohitsharmadl
Traders often overlook the SHORT STRADDLE due to its simplicity.

It remains the TOP strategy to make money when the market is not trending.

Here's how you can make money using only the short straddle
in various market conditions

⬇️ A comprehensive thread🧵


A short straddle is the most basic neutral options strategy.

Where a call option and a put option are sold at the same strike price.

Max profit = Total premium received ( call leg + put leg )

Max risk = Unlimited

(using SLs would be wise)

Upper breakeven = Strike price + Total Premium received

Lower breakeven = Strike price - Total Premium received


Essentially short straddles are initiated when the trader is confident about the market staying in a certain range (between the breakevens of the straddle)

Long-term short straddles usually require fewer adjustments since the range is wide.

Since unlimited loss is a component of the strategy, the trader has to adjust the strategy to increase profit/ mitigating risk
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Emperor\U0001f451
Emperor👑
@EmperorBTC
Technical Analysis Masterclass- Part 2

'Entering the trade'

Entering a trade without ascertaining a certain things is gambling.

In this masterclass we will learn the pre-requisites to enter a trade.

DON'T ENTER A TRADE WITHOUT DETERMINNG THE FOLLOWING.

Please share.

We understand what reward to risk (popularly called risk to reward) is.
It will be denoted by R:R.

We will also try to bust a few myths about R:R and how to avoid losing trades.

Before entering a trade, you need to determine 3 things.

1. Entry trigger
2. Stop loss
3. Target

1. Entry trigger = Reasons for entering a trade. There could be multiple reasons or a single reason for entry.

Generally a set of reasons AKA confluence is a higher probability trade and a generally a safer entry.

Example of an entry trigger.


2. Stop Loss.

The price in the opposite direction of the trade where the trade is exited, at a loss.

At this level, the reason for the entry becomes invalidated according to TA and the price can then move in the opposite direction, probabilistically.


3. Target is the possible price level that the asset might touch based on previous trends or confluence AND where a possible reversal could occur.

Target is the next path of least resistance from where the price might reverse.

We will always ONLY use TA to determine all 3.
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Nick Kapur
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@nick_kapur
A thread of images from a Japanese illustrated history of America from 1861.

Here is George Washington (with bow and arrow) pictured alongside the Goddess of America. 1/


Here is Christopher Columbus (seated at center) reporting his discovery of America to Queen Isabella of Spain.

So far, kinda normal, but wait for it.... 2/


Now it's the American Revolution. Here is George Washington defending his wife "Carol" from a British official named "Asura" (same characters as the Buddhist deity). 3/


And here is Washington's "second-in-command" John Adams battling an enormous snake. 4/


Here is Washington and his wife "Carol" meeting an extremely youthful Benjamin Franklin, who has an impressive squat. 5/
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Robin Berjon
Robin Berjon
@robinberjon
Recently, the @CNIL issued a decision regarding the GDPR compliance of an unknown French adtech company named "Vectaury". It may seem like small fry, but the decision has potential wide-ranging impacts for Google, the IAB framework, and today's adtech. It's thread time! 👇

It's all in French, but if you're up for it you can read:
• Their blog post (lacks the most interesting details): https://t.co/PHkDcOT1hy
• Their high-level legal decision: https://t.co/hwpiEvjodt
• The full notification: https://t.co/QQB7rfynha

I've read it so you needn't!

Vectaury was collecting geolocation data in order to create profiles (eg. people who often go to this or that type of shop) so as to power ad targeting. They operate through embedded SDKs and ad bidding, making them invisible to users.

The @CNIL notes that profiling based off of geolocation presents particular risks since it reveals people's movements and habits. As risky, the processing requires consent — this will be the heart of their assessment.

Interesting point: they justify the decision in part because of how many people COULD be targeted in this way (rather than how many have — though they note that too). Because it's on a phone, and many have phones, it is considered large-scale processing no matter what.
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Anu Satheesh \U0001f1ee\U0001f1f3
Anu Satheesh 🇮🇳...
@AnuSatheesh5
Agastya Muni & Kaveri River
#story
This is a story which describes how River Kaveri was brought on earth by Agastya muni. There was a king named Kavera lived in the Brahmagiri hills who prayed to Brahma for a child. He was blessed with a daughter whom he named Kaveri.


Agastya muni married her. A demon, named Shoorapadma, wanted to trouble people so he prevented rain from reaching South India. As a result famine occurred in South India.
Agastya Muni who came that way was very sad seeing this. He started to pray Mahadeva for a solution.


Shiva gave him small amount of Ganga water in his Kamandalu (small pot) and said wherever you spill this water the river will flow from there. Agastya Muni travelled lot of places to find a suitable place to pour water. Feeling tired he kept his Kamandalu and took rest.


At that time Ganesha took a form of crow and perched on the Kamadalu and made a hole that water began to flow as river Kaveri. This place is now called as Talakaveri (Karnataka), located in the Brahmagiri hill.


Tala Kaveri has temple for Agastheeswara, which denotes the story between Kaveri and Agasthya muni. Kaveri is a part of Ganga, thus, also called Dakshina Ganga.
🙏🕉🙏
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UN Watch
UN Watch
@UNWatch
The UN just voted to condemn Israel 9 times, and the rest of the world 0.

View the resolutions and voting results here:

The resolution titled "The occupied Syrian Golan," which condemns Israel for "repressive measures" against Syrian citizens in the Golan Heights, was adopted by a vote of 151 - 2 - 14.

Israel and the U.S. voted 'No' https://t.co/HoO7oz0dwr


The resolution titled "Israeli practices affecting the human rights of the Palestinian people..." was adopted by a vote of 153 - 6 - 9.

Australia, Canada, Israel, Marshall Islands, Micronesia, and the U.S. voted 'No' https://t.co/1Ntpi7Vqab


The resolution titled "Israeli settlements in the Occupied Palestinian Territory, including East Jerusalem, and the occupied Syrian Golan" was adopted by a vote of 153 – 5 – 10.

Canada, Israel, Marshall Islands, Micronesia, and the U.S. voted 'No'
https://t.co/REumYgyRuF


The resolution titled "Applicability of the Geneva Convention... to the
Occupied Palestinian Territory..." was adopted by a vote of 154 - 5 - 8.

Canada, Israel, Marshall Islands, Micronesia, and the U.S. voted 'No'
https://t.co/xDAeS9K1kW
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