Quote from Diamond Geezer:
But you sound none too bright yourself with your Rolls Royce that you casually mention in your post.
I know many very high net worth people and what they share in common is that they would never make a statement like that.
I smell a rat. [/B]
LOL...
I think this is another "teachable moment" that totally relates to trading.
Everybody has a model of the world based on their experiences. They can also get information from other people to expand their model of the world to include other people's experiences.
Then they experience a stimulus that doesn't fit with their existing model of the world. They make an evaluation, such as the one above, in which they invalidate their new experience in order to preserve their existing model of the world. Why? Because they get so much certainty and significance from their existing model, and they fear losing the certainty they feel from what they believe they already know.
Mr. Geezer believes something like, "Every X I experienced has done Y. No X has ever done Z. Therefore, when I see somebody do Z, they must not be an X."
So instead of expanding the model to include data that says "X does Z" he instead concludes that the unknown CANNOT be in the X set.
This happens all the time with trading, and especially with people who obsess over charts and indicators. They actually convince themselves that X -> Y. And when the outcome isn't Y like expected, they convince themselves that it must not really have been an X they identified because to conclude that X doesn't always lead to Y would destroy their certainty.
And Geezer's analysis about how no high net worth individuals "would never make a statement like that" exemplifies another common problem with traders. A trader will look at examples of head-and-shoulders tops that are followed by a plunge in price and think that ALL head-and-shoulders patterns have a good chance of being followed by a price drop. What is not accounted for are the infinite number of similar patterns that the trader has never seen that led to an increase in price.
So now we have four issues:
1) using a limited data set to draw conclusions, and
2) believing that the limited data set is predictive,
3) believing that the limited data is all encompassing, and
4) drawing inferences from the original data set that might not be accurate in the first place, e.g., "high net worth people would never do...."
So back on topic to my OP, the coaching is intended to help people identify, eliminate, and replace patterns that limit success or lead directly to failure. Successful traders already have installed patterns that work. Smart traders who might even have a great edge might be hindered by some of their patterns, which if eliminated, could turn them into very profitable money makers.
And just a reminder to anybody who missed my initial comment about driving my Rolls Royce to go fishing, it was in the context that to the people who were watching me drive down this little road to the river, it was an unusual sight. I was comparing that to the people who were skeptical that my intentions are sincere simply because in their experience it seemed like an unusual event.
Doug
P.S. For everybody who's waiting for my to reply to their PMs, I'm almost done setting up an online form to help me organize this effort and get to know everybody.
