Hi guys,
Following a swim this afternoon (thanks to the person who suggested it in the 'Running to keep fit' thread- a wonderfull full body workout), I stopped off for a cappuccino at a bar and had a little read through Trading and exchanges again. I came across a paragraph that I thought would be interesting to post here, here is is...
'Simple principles of evolutionary biology can explain why we often see patterns that do not really exist. Our primitive ancestors needed to recognize signs of danger in order to survive. Those who could not recognize these signs undoubtedly had fewer children than those who could. For example, our ancestral aunts and uncles who could not recognize signs of a nearby saber-tooth tiger probably too often found themselves on the wrong end of the food chain. They did not survive to provide our ancestors with cousins. Since the costs of being wrong when a danger is present are much greater than the cost of being wrong when there is no real danger, survivors often identify more dangers than truly exist. As the decendants of those survivors, we are biologically programmed to identify patterns where none may exist.
Good traders must recognize this predisposition toward falsely identifying patterns. Otherwise they often will trade foolishly.'
Im sure many have already pondered the 'see'ing things that are not really there/indictive' chain of thought with regards to trading, but I feel this extract (from trading and exchanges) is a logical and interesting way to see and then understand the reason for this human behavior, and how it doesnt lend it self well to trading.
Leon
Following a swim this afternoon (thanks to the person who suggested it in the 'Running to keep fit' thread- a wonderfull full body workout), I stopped off for a cappuccino at a bar and had a little read through Trading and exchanges again. I came across a paragraph that I thought would be interesting to post here, here is is...
'Simple principles of evolutionary biology can explain why we often see patterns that do not really exist. Our primitive ancestors needed to recognize signs of danger in order to survive. Those who could not recognize these signs undoubtedly had fewer children than those who could. For example, our ancestral aunts and uncles who could not recognize signs of a nearby saber-tooth tiger probably too often found themselves on the wrong end of the food chain. They did not survive to provide our ancestors with cousins. Since the costs of being wrong when a danger is present are much greater than the cost of being wrong when there is no real danger, survivors often identify more dangers than truly exist. As the decendants of those survivors, we are biologically programmed to identify patterns where none may exist.
Good traders must recognize this predisposition toward falsely identifying patterns. Otherwise they often will trade foolishly.'
Im sure many have already pondered the 'see'ing things that are not really there/indictive' chain of thought with regards to trading, but I feel this extract (from trading and exchanges) is a logical and interesting way to see and then understand the reason for this human behavior, and how it doesnt lend it self well to trading.
Leon
Living the adventure in my head.
