In technical terms, the researchers call this projected emotion, "anticipatory affect". In simple terms, the results of this meta-analysis of the brain's reaction to probabilities in risk goes like this: 1. A trader or PM takes in information about the expected mean, variance or skewness of a trade. 2. The…
Earlier this week, one of my clients with the title "Head of Equity Trading" wrote exactly this sentence copied and pasted from his email: "i had another one of those traading days where i let my loss just go to its fullest, and had a really bad day." SO... how…
Did you know that no one knows for sure how many "basic" (irreducible) emotions there are? Many scientists have long believed in six, a new study indicates four and a growing body of work by the teams emerging from Lisa Feldman Barrett's labs makes a very credible case for only…
As I prepare for The Galtere Institute's Behavioral Finance symposium, I am doing what I always do before I speak - catching up on the latest studies on emotion and risk decision making. For example, did you know that there is actually still much disagreement in science about what emotion…
Price action in the markets is "the tell" - as they used to say. (It seems that is one of those words that has come and gone). But the problem is this said 'tell', tells you different things - it can be interpreted many ways. It is what is known…
Shull's first article "What Would Freud Say? Stroll Down Freud's Mental Path to Profits", December 2004. When I wrote this I had NO idea whatsoever that I would ever publicly write or say ANOTHER word on the psychology of trading. It was just an idea I had based on re-writing…
Originally posted on Business Insider, April 17. Conventional wisdom in trading psychology used to depend on two primary tenets – discipline and ‘control your emotions’. But that was before neuroscience started putting traders, poker players and other risk-gamers into brain scanners. Now that we know that all decisions depend on…
Dear Denise, I hope you are well and that your book is coming along nicely. I haven't written in awhile, but I’ve been having quite a time with the Access course. When I began, I made steady progress through the first four or five chapters, and my trading was improving…
Here are some of the things I've been thinking about: The two areas in trading that separate the men from the boys (so to speak) are: 1.) The ability to divide environmental perceptions in half and process them separately. First I ask myself what I am feeling and in doing…
Somewhere down the road, you just might find you agree with more than you expected. Or worse, learned a thing or two about making better decisions in the face of UOUP (rhymes with soup) - uncertain outcomes uncertain probabilities.
