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Dump it Here

Discussion in 'Beginner's Lounge' started by Skate, Dec 17, 2018.

  1. Skate

    Skate

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    Sometimes you feel like dumping stuff & this thread might be the perfect place.

    Helping Others
    You might want to dump stuff here to help others

    Unload
    You might want to unload & dump something off your chest

    Gems
    You might even want to dump some gems here

    Let it go
    Sometimes you can't let somethings go till you dump it on paper

    Dump it here
    If you want to dump it, dump it here

    Skate.
     
  2. Skate

    Skate

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    Tables3.jpg

    Is our mind our worst enemy - knowing that these two tables are the same size yet our mind won't let them be.

    Our mind deceives us.

    GEM
    Perception = reaction

    Skate.
     
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  3. Skate

    Skate

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    A serious design flaw - faulty thinking

    People experience genuine pleasure—a rush of dopamine—when processing information that supports their beliefs.

    “It feels good to ‘stick to our guns’ even if we are wrong,”

    Skate.
     
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  4. Skate

    Skate

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    WHY FACTS DON’T CHANGE OUR MINDS

    Fact

    Even after the evidence “for their beliefs has been totally refuted, people fail to make appropriate revisions in those beliefs,”

    Confirmation bias

    Consider what’s become known as “confirmation bias,” the tendency people have to embrace information that supports their beliefs and reject information that contradicts them. Of the many forms of faulty thinking that have been identified, confirmation bias is among the best.

    If reason is designed to generate sound judgments, then it’s hard to conceive of a more serious design flaw than confirmation bias.

    Skate.
     
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  5. Skate

    Skate

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    Blind spots

    There are over ninety biases related to judgment and decision making (there are also biases that operate specifically in social situations and others that are relevant in memory recall).

    You could drive yourself crazy if you tried to learn all of the biases psychologists have discovered. Fortunately, for trading this isn’t necessary. It is important, however, that you understand the more common ones and how they can undermine your trading.

    Skate.
     
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  6. Skate

    Skate

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    Confirmation Bias

    Once an assumption is made, people tend to seek confirmation of their assumption, rather than look to disprove it. We have a strong need to be right and tend to look to confirm what we already know or believe.

    Skate.
     
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  7. Skate

    Skate

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    Hindsight Bias

    20‐20 vision
    Looking back is always with 20‐20 vision. Hindsight bias is sometimes called the “I‐knew‐it‐all‐along effect,” suggesting that people view events after they happened as more predictable than they were before they occurred.

    Selectively recall
    In succumbing to hindsight bias, we tend to selectively recall only certain information that validates what we now know to be true and then create a story about it to make sense out of the event as we attempt to explain it to ourselves.

    Biases
    Biases are mental blind spots, it takes special effort to avoid falling into their traps. Often, we realize our errors after the fact and it is too late.

    Skate.
     
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  8. Skate

    Skate

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    How We All Think
    When under the influence of emotions, we may surrender our emotional intelligence and this is why trading is such a difficult endeavour.

    Being hijacked
    We all feel that sinking feeling in our guts after we enter a trade and that trade go slightly against us our emotions kick in and if the fear is strong enough, we might cut the trade short to escape the unpleasantness, hijacked by our emotions encouraging us to do the wrong thing at the wrong time.

    Relieve distress
    The simple and effective solution to alleviate the internal discomfort is to exit the trade, which the trader does. Note carefully that closing the trade is done solely to relieve distress. Cutting the trade is effective at removing distress and our brain codes it into memory.

    Skate.
     
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  9. Skate

    Skate

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    Decision making
    When faced with a complex or difficult decision, people often simplify their task by applying an abbreviated rule set to help problem‐solve and make the decision. A simple approach produces a good enough result most times but sometimes it can lead to significant errors and inconsistencies in our judgments.

    Jumping to a conclusion
    Simply jumping to a conclusion without bothering to assess the full range of possibilities is an inbuilt weakness we all suffer.

    Our Lizard Brain
    System 1 is our Intuitive mind – it’s our fast thinking mind – Our Lizard Brain

    Our evolved brain
    System 2 is our Deliberative mind – it’s our slower thinking mind – our evolved brain

    So why all this discussion about our two types of minds?
    Well, it turns out that understanding this two‐part feature of our mind is vitally important for trading. Intuitive mind, quick and efficient, is exceptionally poor at determining probabilities, a key skill in trading.

    Thinking is hard work
    Our minds like to conserve energy and will employ deliberative mind only when necessary as “Thinking is hard work”

    Skate.
     
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  10. Skate

    Skate

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    Losing Money
    No one likes to lose money, but it is an inescapable part of the trading. There is no method that has ever been developed that doesn’t lose money some of the time.

    Probabilities
    The simple reason for this is that trading in all of its various forms is a probabilistic endeavour. This means that for any given trade that sets up, there is a probability that it will be a winner, and there is also a probability that it will turn out to be a loser.

    Psychological hurdle
    Loss aversion is a significant psychological hurdle for traders to overcome even though loss is a natural part of the trade setup probabilities.

    Our attitude
    Trading would no doubt be easier psychologically by adopting an attitude that losses are unavoidable and natural.

    Uncertainty
    Above all else, traders must accept the facts: we are operating with incomplete and uncertain data and every trade has a definite probability of loss.

    Skate.
     
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  11. Skate

    Skate

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    Personal beliefs – what we believe
    Consider the fact that none of us was born with any of our beliefs.

    Profound impact
    They were all acquired in a combination of ways. Many of the beliefs that have the most profound impact on our lives were not even acquired by us as an act of free will.

    Beliefs are instilled by other people.
    And it probably won't come as a surprise to anyone that usually the beliefs that cause us the most difficulty are those that were acquired from others without our conscious consent. By that I mean beliefs that we acquired when we were too young and uninformed to realize the negative implications of what we were being taught.

    Perception
    They manage our perception and interpretation of environmental information in a way that is consistent with what we believe. There isn't much about the way we function that beliefs don't play a major role in.

    They keep on keeping on
    Beliefs keep on working regardless of whether or not we are consciously aware of them.

    Skate.
     
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  12. Skate

    Skate

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    The Wandering Mind
    Have you ever noticed how many times your mind wanders while reading?

    Thinking of other things
    While reading, you may have noticed that your mind began thinking of other things.

    Time travelers
    We are all time travelers our thoughts are either relating to the past or what may happen in the future, it is never in the present.

    Being in the present moment is rare
    Usually, this aspect of the mind goes unnoticed. We slip effortlessly into past remembrances or into future projections without even being aware it is happening and you will find your mind is rarely in the present moment.

    We are all normal
    Mind wandering is our normal, default mode. We go from one mental association to the next, often in haphazard and random ways as the paragraph above highlights. If this is new to you, you need not be alarmed by this as it’s just how the mind naturally operates.

    Unfocused
    When our mind wanders, our attention has become unfocused. Keeping focused is a real skill that requires practice to develop as it helps us to identify emotions as they arise and what they mean, a key aspect of emotional intelligence.

    Skate.
     
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  13. Skate

    Skate

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    Thinking
    Thinking is integral to being human. It is so much a part of us that we usually don’t think much about thinking. If we pause for a moment and observe our thoughts, however, we begin to become aware of the activity of our mind.

    It never stops
    The mind is tirelessly commenting and telling us things. Unless you practice, you will find it impossible to quieten your mind and stop the flow of thoughts for all but a few seconds. Even with practice, quieting the mind for more than a few minutes before another thought involuntarily arises is elusive for most people.

    Is it reality
    Because we have experienced our mind’s chatter every day for as long as we can remember, we are accustomed to it and rely on it heavily. We tend to accept whatever our mind tells us as an accurate reflection of reality.

    Skate.
     
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  14. Skate

    Skate

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    Lucky 13

    The 13 previous posts are to encourage you to start dumping - if you have something to say...

    DUMP IT HERE !

    Skate.
     
  15. Skate

    Skate

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    I’ve been asked…

    Why do you think you need to help others?
    So others experience an alternative point of view
    In general - people stop learning


    Why do you feel the need to force your views on other?
    I try very hard not to force my point of view onto others.
    Thinking is integral to being human.
    I never tell people what to think but encourage them how to think
    Thinking is so much a part of us that we usually don’t think much about thinking.
    If we pause for a moment and observe our thoughts, however, we begin to become aware of the activity of our mind.


    Why do I have a need to educate?
    Hopefully to help others
    Sometimes just to get somethings off my chest
    Sometimes I can't let things go till I put it down on paper or tell someone


    Why quote Gems all the time & why do you keep repeating them?
    Life gems are everywhere & repeating them is for reinforcement
    Hearing something once usually means nothing
    Repeating is conditioning


    I’ve been told..

    I don’t want to hear that sh!t.
    From my experience- It pays to listen to everyone & than you decide if it’s relevant or helpful.
    You get to decide what to keep & what to discard.
    When you don’t listen you forgo the right to learn.

    Skate.
     
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  16. Skate

    Skate

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    Why we shouldn't jump to a conclusion - 1

    An example of our Lizard brain in action
    A few multiplication questions
    What is 3 X 3 = _____
    What is 5 X 12 = _____

    When answering questions, the majority of people show a characteristic common in many problem‐solving and trading errors: they jump to the first answer that comes to mind and spend little if any effort to assess whether or not they have arrived at the correct answer.

    Skate.
     
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  17. Skate

    Skate

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    Why we shouldn't jump to a conclusion - 2

    Read the question and jot down your answers before reading on.

    Doing so will help give insight into an important psychological phenomenon highly relevant to your trading:

    A question that Daniel Kahneman asked in his podcast

    A bat and a ball cost $1.10 in total. The bat costs $1.00 more than the ball. How much does the ball cost? _____ cents

    Skate.
     
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  18. Skate

    Skate

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    Recap

    A bat and a ball cost $1.10 in total.
    The bat costs $1.00 more than the ball.
    How much does the ball cost? _____ cents

    Our Lizard brain
    Most of us jump to the first answer that comes to mind

    Was your answer 10 cents?

    Most people give this answer - which is incorrect..

    Inbuilt weakness
    Simply jumping to a conclusion without bothering to assess the full range of possibilities is an inbuilt weakness we all suffer.

    Skate.
     
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  19. Skate

    Skate

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    Let’s recap the bat and ball question again..

    Why the answer of 10 cents is incorrect
    If the bat costs $1.00 more than the ball, then the ball could not cost 10 cents because then the bat would have to cost $1.10, which would have a total cost of $1.20.

    The answer
    The ball costs 5 cents

    The ball costs 5 cents and the bat, costing $1.00 more than the ball, would have to cost $1.05.
    Combined, the bat and ball have a total cost of $1.10.

    Thinking
    Take a moment to think this through if you need to.
    If your answer was incorrect, don’t feel badly as most people answer incorrectly.

    An illustration of our natural limitations
    It’s less an issue of intelligence than it is an illustration of our natural limitations in thinking through complex problems.

    It's a natural preference
    An incorrect answer on this mental problems indicate that a preference for using our Lizard brain or jumping to a conclusion is likely to produce judgment errors when in situations involving uncertainty such as trading.

    Skate.
     
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  20. Skate

    Skate

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    There’s No Time Like Today

    “The best time to plant a tree was 20 years ago. The second best time is now.” — Chinese proverb

    Meaning, it isn’t too late to start..

    Start what?
    That's for you to decide.

    Skate.
     
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