Category Archives: Trading Psychology

Emotional Inertia

I have always been a fan of Decision Theory – the notion of how we make decisions with varying amounts of information has always been fascinating to me. This should seem obvious since trading is a profession that straddles both normative and descriptive decision making. Normative decision is about making decisions with incomplete information whereas…

Why Fighter Pilots know that Quick Reactions are for Losers

​‘I plan for the 6th order effect and I do it in about half a second.’ If I had heard that from anyone other than another fighter pilot, I would’ve laughed them out of the room but, from my buddy, Jim – I knew it was true. I flown with him many times before. He…

What If He Falls?

Against Self-Criticism

I have thought and continued to think a great deal about the relationship between critical thinking and cynicism — what is the tipping point past which critical thinking, that centerpiece of reason so vital to human progress and intellectual life, stops mobilizing our constructive impulses and topples over into the destructiveness of impotent complaint and embittered resignation, begetting cynicism?…

Same Old Same Old

One of the things I have noticed about travel is that being human is largely universal – that would seem to be an odd statement that touches on the banal. But the natural human instinct is to think that people who are not like us are different. The tendency is to split the world into…

How to Make a Big Decision

In July 1838, Charles Darwin, then 29, sat down to make a decision that would alter the course of his life. The decision he was wrestling with was not related to scientific questions about the origins of species. It was a different kind of decision — existential as well, but of a more personal nature:…

Nice People Have Emptier Wallets

Are you an agreeable person—you know, a nice guy? If so, a logical follow-up might be: how are your finances? And here’s why: “Agreeable peoplehave lower savings, they have higher debt, and they’re also more likely to go bankrupt or default on their loans.” Sandra Matz is a computational social scientist at the Columbia Business School…

More On Sensation Seeking Money Managers

Sugata Ray conducts the most fun research. From his post teaching and researching at the University of Alabama, he studies disparate influences on asset management and market microstructure. He has looked at the effect of personal real estate transactions and “marital events” on the productivity and risk tolerance of hedge fund managers. We caught up…