Many new to trading have the tendency to liquidate positions that show a small profit, yet they keep those positions that show a loss as are unwilling to take a loss, in hope that prices will rebound. Such a counter-intuitive strategy will result in small wins and large losses, but why do people still do […]
Timing is an essential element in trading and investing. For any product or market, if you buy and sell at the right time, you can make a lot of money, but if you get the timing wrong, you can also lose a lot of money. And to get this timing right, you need to have […]
Knowing all the different cognitive biases and dangers of emotional decision-making can make us more aware of whether we are thinking logically and making the right decisions. But it can hard to be on 100% alert all the time, especially on stressful days. So, what are some of the simple habits we can cultivate to […]
To help traders and investors overcome the problem of emotions in decision-making, the first step is to be aware of the situations in which we might exercise flawed thinking, in the form of cognitive biases. Cognitive biases are systematic errors in thinking that affect the decisions and judgments that people make, so they might think […]
In classical finance, traders and investors should always make rational decisions to maximise their self-interests, but in practice, quite often they end up making decisions that are not always rational, due to the influence of emotions and cognitive biases. There is a whole (relatively new field) of finance called behavioral finance, which seeks to understand […]
