Archives of “Behavior” tag

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SIX Life Lessons From 'The Wolf Of Wall Street'

  
  Education
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Beyond being a fun movie, there are some lessons we can learn that can be important in our lives.

1. Sex matters.

When we’re talking about males and females (whether they are male and female monkeys, zebras, or human beings) sex matters. There’s a lot of sex in the movie, most of it raw, addictive, and not very pretty. But there is a primal vitality to desire for sex and more sex.

But sex matters in another way. Most of the young stock brokers, and hence the players, in this movie are males. In the “fun and games” that play out repeatedly these are clearly male fun and games. We all know that males and females are different (as well as similar in many ways), but the difference goes right down to our DNA.

According to David Page, M.D., one of the world’s leading experts on male and female genetic differences and professor of biology at the Massachusetts Institute of Technology (MIT):

“There are 10 trillion cells in human body and every one of them is sex specific. We need to build a better tool kit that is XX and XY informed rather than our current gender neutral stance. We need a tool kit that recognizes the fundamental difference on a cellular, organ, system, and person level between XY and XX.”

In Marianne Legato’s book, Eve’s Rib: The New Science of Gender-Specific Medicine, she says,

“Everywhere we look, the two sexes are startlingly and unexpectedly different not only in their internal function but in the way they experience illness.”

In all aspects of our lives, it’s good to ask, “what does sex have to do with it?”

2. Sex can be as addicting as cocaine. (more…)

Persistence -Self Discipline

  
  Education
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Nothing in the world can take the place of Persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan “Press On” has solved and always will solve the problems of the human race.
– Calvin Coolidge

Persistence is the fifth and final pillar of self-discipline.

What Is Persistence?

Persistence is the ability to maintain action regardless of your feelings. You press on even when you feel like quitting.

When you work on any big goal, your motivation will wax and wane like waves hitting the shore. Sometimes you’ll feel motivated; sometimes you won’t. But it’s not your motivation that will produce results — it’s your action. Persistence allows you to keep taking action even when you don’t feel motivated to do so, and therefore you keep accumulating results.

Persistence will ultimately provide its own motivation. If you simply keep taking action, you’ll eventually get results, and results can be very motivating.  (more…)

The Secret To Success

  
  Education
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Never forget: This very moment, we can change our lives. There never was a moment, and never will be, when we are without the power to alter our destiny. – Steven Pressfield

One of the greatest powers of Resistance and procrastination is that they compound themselves over years and decades. They can build to the point where they make you feel as if you have no control over your own destiny. They make it easier to just give up and be normal.

Pressfield reminds us that we are always in possession of the power to change the course of our lives. At any single moment of our lives, we are capable of completely altering the way things are going. 

After years of allowing the Resistance to hold us back in our trading, the chances of ever achieving trading success might seem bleak. It is important to keep in mind that we always possess the power to change that. We can beat the Resistance and procrastination through diligent and consistent work.

That is the one and only secret to trading success. It is also the one and only secret to success in just about any other field you might want to pursue.

10 Ten Reasons Traders Lose Their Discipline

  
  Education
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10-Losing discipline is not a trading problem; it is the common result of a number of trading-related problems. Here are the most common sources of loss of discipline, culled from my work with traders:

10) Environmental distractions and boredom cause a lack of focus;

9) Fatigue and mental overload create a loss of concentration;

8) Overconfidence follows a string of successes;

7) Unwillingness to accept losses, leading to alterations of trade plans after the trade has gone into the red;

6) Loss of confidence in one’s trading plan/strategy because it has not been adequately tested and battle-tested;

5) Personality traits that lead to impulsivity and low frustration tolerance in stressful situations;

4) Situational performance pressures, such as trading slumps and increased personal expenses, that change how traders trade (putting P/L ahead of making good trades);

3) Trading positions that are excessive for the account size, created exaggerated P/L swings and emotional reactions;

2) Not having a clearly defined trading plan/strategy in the first place;

1) Trading a time frame, style, or market that does not match your talents, skills, risk tolerance, and personality.

Optimism for Traders

  
  Education
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  • When good things happens to an optimist, he says it’s permanent, pervasive, and personal. When a bad thing happens to an optimist, she says it’s temporary, specific, and not personal.
  • Because the optimistic trader looks with bright enthusiasm towards the future, she is able to be realistic about what has happened in the past and is happening in the present. A pessimistic trader who has limiting doubts about his future trading, may be unwilling to admit what has happened or is actually occurring.

Goal-Setting, Discipline, and the Emotions of Traders

  
  Education
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Discipline problems typically begin with experiences of frustration.

Frustration is a function of not meeting goals and expectations.
Many times, traders try to adopt psychological strategies for combating frustration. These can be helpful, but they don’t get at the root of the frustration problem.
If we do not set challenging, but feasible goals, we cannot experience ourselves as effective, successful people. Goals that are perfectionistic cannot be met and thus generate frustration.
The failure to set goals robs us of opportunities for cultivating a sense of purpose and well-being.
Goal-setting is not just essential to mastering markets; it’s essential as a tool of psychological management. We shape our experience of ourselves by controlling what we pursue and how we evaluate the pursuit.
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HUMAN MISJUDGMENT- 22 Points

  
  Education
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1.  Under-recognition of the power of what psychologists call ‘reinforcement’ and economists call ‘incentives.’

2. Simple psychological denial.

3. Incentive-cause bias, both in one’s own mind and that of ones trusted advisor, where it creates what economists call ‘agency costs.’

4. This is a superpower in error-causing psychological tendency: bias from consistency and commitment tendency, including the tendency to avoid or promptly resolve cognitive dissonance. Includes the self-confirmation tendency of all conclusions, particularly expressed conclusions, and with a special persistence for conclusions that are hard-won.

5. Bias from Pavlovian association, misconstruing past correlation as a reliable basis for decision-making.

6. Bias from reciprocation tendency, including the tendency of one on a roll to act as other persons expect.

7.  Now this is a lollapalooza, and Henry Kaufman wisely talked about this: bias from over-influence by social proof — that is, the conclusions of others, particularly under conditions of natural uncertainty and stress. (more…)

8 Words For Traders

  
  Education
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1. CONFIDENCE: absolutely essential in an environment that feeds on emotional    instability.
2. TRUST: if you cannot trust yourself who can you trust? Trust your rules, trust your edge, trust that you will do the right thing-no matter what!
3. FOCUS: you will never learn all there is to learn about the market.  Push your ego aside and focus on one market and one edge.
4.  ACCEPTANCE:  you have to accept what the market is willing to give or you will give the market what it wants to take.
5.  RESPONSIBILITY: you and you alone are responsible for the money you lose and the money you make.  Take the credit for both.  Either way you deserve it.
6.  PATIENCE:  The market is not the place to learn patience, it is the place to practice it.
7.  RULES:  the market has no rules and no one else will do it for you. Develop rules for entering AND exiting trades before trades are made.
8.  RESPECT:  you have to respect the market for what it is not for what you want it to be.  The market has a logic all its own.  You may not like it but you have to accept it.

AN ATTITUDE ADJUSTMENT

  
  Education
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Whether it is a child, a spouse, friend, neighbor, or an acquaintance, we have all experienced times where someone gets the best of us. No matter how hard we try to conceal character weaknesses, that other person causes us to lose patience, get angry, agitated, or frustrated. Even a loved one gets “under our skin” from time to time.  Most often, we blame the other person for our irritation and we let it show, thus exposing our own irrational way of dealing with the situation.  We end up being the one who looks out of control.  What is really ironic though is that the one we are so upset with, you know, the one who “got under our skin” usually had no intent to evoke our irrational, immature, and out of control actions.  They are usually ignorant to the cause of our irritation.  When another gets under our skin it is best to look inside, not outside for the answers, knowing that it is our perception of current events that matter most. We should work on changing ourselves to better cope with others instead of trying to change others hoping they will better be able to cope with us!

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A hunch can be trusted if it can be explained

  
  Education
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  • When a hunch hits you, the first thing to do is ask whether a big enough library of data could exist in your mind to have generated that hunch. Ask yourself whether you are genuinely knowledgeable on the particular topic. Have you studied it? Have you been following its ups and downs?
  • Trust your hunch only if you can explain it — that is, only if you can identify within your mind a stored body of information out of which that hunch might reasonably be supposed to have arisen. If you have no such library of data, disregard the hunch.
  • The reason for subjecting hunches to this rigorous testing is that sometimes we get flashes of intuition that aren’t based on good, hard fact. They are airy nothings.
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