Deal or no Deal Syndrome and other conditions that affect traders

Okay, I was watching deal or no deal, (for my sins) and was thinking that it is the "here's what you could have won" type game that often affects people in the trading game as well.

Here is the scenario. You are offered £19k and have 5 boxes left. There is still some big money on the table say £250k, £20k and 3 lows numbers. The odds are against you making more money, yet so many people carry on and lose. In another situation the player deals and then is shown that in fact they could have won a lot more money. There is no way the player could have know what would happen yet still regret their decision.

In trading often a trader will sell, only to see the market carry on further and then regret exiting too early. Next time they hold for longer only to see the market reverse and take away all their profits. This typical syndrome affects many traders and the only treatment is a proper exit strategy defined before you enter the trade.

Can anyone think of any conditions that affect traders in everyday life or any other useful analogies linked with trading follies and failures.

hehe..

I've always thought similar, like people are so conditioned to behave in certain ways without doing it. Common example is choosing fancy packaged foods over a plainly packaged food product, both of which are identical, yet one costs near double the price. Really contradictory in my eyes, and these same people always tend to moan about being broke :s

Your talking about cognitive biases http://hermitrader.tumblr.com/post/450550645

You need to know your own ones well so that you can recognize when its happening and why you should ignore it.

That deal or no deal programme is quite addictive and like you I hate myself when I watch it. I do count the boxes and try to work out the best strategy based on what's left. Not all that easy without a spreadsheet or a calculator. But you point to an interesting parallel (I'm watching my spelling here cos Sim's watching) with Forex and that "what it could have been" syndrome.

One of them is when you buy something and then see something better or at a lower price. Technology has us by the balls with this problem. At least if we like gadgets, it does. Another is looking at other women than mine. I won't go any further there...

So exit strategies it is. It's an acquired skill and once people leverage properly closing should come as naturally as the original buy or sell, because closing a buy is a sell and closing a sell is a buy anyway.

The biggest kick I get out of Forex is when I close on a retracement, and re-enter when the retracement is over, thereby getting part of a move twice. It doesn't happen very often, needless to say.

Have a great weekend.

It is an interesting concept, the game show that is, and yes I do find it interesting and intriguing watching people who have come with nothing basically gamble with what could be theirs with the word 'Deal'. I guess in the end it comes down to a bunch of parameters that, unless it was our deal, we find it hard to comprehend some peoples reasons.

The trouble is, from my POV, is that the shear fact that they have nothing to loose, although that is arguable because from the moment the first bank offer is given they could take ownership however they will always leave with more than they came with. Traders do have the same mindset, to a degree and that degree is the starting capital. Those who have sufficient would, and once again statistically this is completely arguable based on the failure rate, not take a punt with the odds against you at taking a considerable loss. Although it is personally entertaining watching someone with a 20% chance of increasing there stake, albeit slightly, when you come down to the 1 case at a time scenario and the only thing of added value is the single higher case, and of course the bank offer provided they avoid that big case.

In terms of a correct exit strategy it will always leave an inprint of elation or disgust regardless however provided testing with such a defined exit has provided a system to be well rounded and contain an edge then there are few problems. If the show was based on a week round opportunity in which a contestant could come back the next night provided they didnt bust out I would be lead to believe that fewer contestants would take the larger risk instead opting for the compounding effect of multiple night wins. But in the end Deal or No Deal is really just a punt with very little skill required and alot of luck needed, which I guess is the view of trading to alot of people....

In terms of the offer, I would be annoyed at the bank for such a petty offer. I mean 19k is a mere 8% of 250k with an 80% chance of increasing the odds but I know the numbers are for reference only so I cannot comment to much but I fully understand where your coming from. The Deal or No Deal in Australia only goes to 200k and the number of times I have seen the 200k on offer and nothing else relevant, a bank offer of 28-30k on the table, a person who is struggling to make ends meet but looks at the 80% thinking it is 100%, saying NO DEAL only to choose the case that has the 200k and then been offer 2k, I sit there an I laugh at the stupidity but being a gambler myself I would probably do the same thing... Hey arent we just human.

Razor

I quite often get a slap for the double look but I guess thats my own fault for sticking my head out the window at a set of traffic lights as she walks passed my car as for the missus, well I wont go there either


It is a thing of beauty, mans way of getting 1 back when you double dip into the retracement lol

Razor

Why? *scratches head*