Readings: Digging Deeper, Popular Opinion, Breaking Bad Trading Habits,
- Curtis Faith: On Digging Deeper
New traders tend to overgeneralize. They tend to find patterns that seem to work in the recent past and believe that these will work in the future. The solution is to dig deeper and do research. We now have available an enormous amount of market data which can be used to explore market phenomenon that we have not seen ourselves. There is no excuse for not doing your own research.
- Via Michael Covel, APA: A familiar opinion is the same as a popular opinion?
Whether people are making financial decisions in the stock market or worrying about terrorism, they are likely to be influenced by what others think . . . repeated exposure to one person’s viewpoint can have almost as much influence as exposure to shared opinions from multiple people . . . hearing an opinion multiple times increases the recipient’s sense of familiarity and in some cases gives a listener a false sense that an opinion is more widespread then it actually is.
- TraderPsychology: So How do Traders Break Their (Bad) Habits?
The process is long and hard. First, the addict must admit that he needs help. That he is powerless to change by himself. Usually, it means that the addict has hit a nadir or hit bottom. Only at such a time, when he is unable to lie to himself anymore, will he be motivated to seek change and be willing to put in the hard work that is required.
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