Tag Archives: confirmation bias

On anecdotal evidence

Cracks happen and dams are built everyday in our investment/trading thesis.  It is job to understand our bias and add it to the equation.  Yes, in a perfect world, we wouldn’t have bias but we are not in a perfect world. The most popular method to attain confirmation bias is through anecdotal evidence.  I amContinue Reading

Predictions are failing at a rapid pace.

I do not envy the job of the economen (economist with the same track record as weathermen), but they still put themselves out there so we should learn something from them.  I do have some respect or empathy for them, they are proven wrong and wrong again but they still keep coming back.  Being aroundContinue Reading

Don’t let data f@#% you.

Data and information are like air.  It is everywhere and we need it to survive.  Just like in every breathe we take we have a chance to do what we want with it, data is no different.  Anyone can manipulate any data and make it say whatever they want.  The tools we have today toContinue Reading

Signs confirmation bias is becoming a problem.

As a reminder confirmation bias is the tendency to like or seek out information that confirms what you believe. The reason confirmation bias is so dangerous in trading is that it can cause you to lose twice. By the time price or loss has proven your belief as wrong, it may force your belief into the otherContinue Reading

Diversified reads feat. @rougetraderette @thearmotrader @derekhernquist @chessnwine

In Rogue Traderette’s latest post, Ed Seykota and Onions, she explains Ed Seykota’s quote about how everyone gets what they want from the market.  I love her analogy with an onion.  I find that when it comes to trading advice you have to get through at least three layers of onion (asking why’s) before thereContinue Reading

Socionomics predicts Arab Spring?

Please do not take this as an endorsement of socionomics but I am finding their material at least thought provoking. As a trader it is important to take many points of view to understand your opponents.  By seeking other sources our confirmation bias is revealed.  I would be more impressed if they actually predicted “ArabContinue Reading

Trading the odds has always hurt my trading.

I will never tell someone how to trade, if it works for them do it.  But I have always had a problem trading the odds. The last 4 times X has happened the market has done Y. It never tells the whole story. It is like looking at a chart and expecting to learn something.Continue Reading

Another lesson about confirmation bias.

Confirmation bias is a phenomenon wherein decision makers have been shown to actively seek out and assign more weight to evidence that confirms their hypothesis, and ignore or underweigh evidence that could disconfirm their hypothesis.  Via Science Daily   People are angry about GE not paying income taxes.  Even if you think it is unethical,Continue Reading

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