It's all about the patterns. . .

Discussion in 'Psychology' started by TGregg, Jun 18, 2010.

  1. TGregg


  2. henry76


    One of the biggest phalacies is that "almost any system will work with appropriate money management and risk control" , I've heared this or similer so many times , yet probability is hardly ever mentioned.
  3. Scalper :)
  4. A Convenient Explanation Stops the Search for the Best Explanation

    When it comes to decision making, people tend to be satisfied with the first explanation that fits. Once we
    have decided on an explanation, we give up the search for alternatives.
    For example, the newspaper reports an increase in drug-related crimes in your community. In a separate report,
    you read that immigrants have been arrested. Using mental shortcuts, your mind relates the two stories and
    comes to a conclusion that you believe is logical because of your biases and assumptions. Without any real
    evidence, you start to believe that crime and immigration are related. Over time you pay special attention to
    any news reports that appear to support your position and gradually become ever more convinced. Finding
    additional evidence that supports your conclusion proves that you were right in the first place. No effort is
    made to prove that you were ever wrong. No effort is made to test the validity of facts used as evidence.

    Patterns Allow for Mental Shortcuts

    In summary, the need for explanations drives the mind’s tendency to use mental shortcuts. Explanations create
    patterns, and patterns allow our mental autopilots to be programmed. Mental shortcuts help us simplify the
    world. They are essential. The down side is that they simplify our thinking about the world, leading to superficial
    analysis and poor-quality decisions. Once we understand that process, it becomes difficult to imagine how
    good decisions are ever made.

  5. Redneck


  6. Barriers to Brilliant Decisions

    Broadly speaking, there are four mental forces that affect decision making. These are what we call the barriers to
    brilliant decisions. Collectively they undermine one’s willingness to be thorough and ability to be objective. Understanding
    their effect on the way one thinks is an important first step towards becoming a better decision maker.

    1. Mental Shortcuts
    – Patterning (Bias and Assumptions)
    – Need for Explanations
    2. Emotions
    3. Stubbornness
    4. Focus

  7. If this is a fallacy, discretionary trading would never lead to consistently profitable trading and all profitable discretionary traers are based on luck.
  8. Mental Shortcuts

    Strange as it may seem, most routine decisions are made unconsciously. Imagine eating a meal. Other than
    when to begin, the process of eating is automatic. No thought is required for raising a sandwich to your
    mouth. All of the decisions about how to eat are made on autopilot. There are both physical and mental
    autopilots. Our mind does not have to think about how to eat, but it can if we want it to. In a similar way, if
    permitted to do so, the mind will analyze and interpret the world around us based on an autopilot-like setting.
    Imagine seeing someone in a white lab coat running across a road. They are headed towards two cars that are
    stopped by the roadside. People are milling around. You assume that someone is hurt. The person in the white
    coat is probably a doctor and there has been an accident. With just a few clues, we are able to paint a mental
    picture of what is happening. Our mental autopilot fills in the details.
    The point is that much, if not most, of our thinking is done on autopilot. Our mind interprets situations for us
    by filling in details based on previous experience. Mental shortcuts are an integral part of routine thinking.
    They help us cope with a complex world by assimilating thousands of bits of sensory information every day
    that might otherwise drive us crazy. They are a necessary convenience.

    #10     Jun 19, 2010