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Behavioral_economics

The 3 Dimension Trading / Investing 3D Investing or Trading = Technical Analysis + Depth Analysis Depth Analysis: • Macro analysis or / and • Micro analysis or / and • Other analysis See the following video "3rd Dimension Analysis" link for other analysis. Many use either technical or fundamental analysis alone in their research work, I observed they likely to struggle with confidence to make the entry judgement call. We can develop a greater confidence in how we time the market by combining TA + FA. 3 types of gold for trading: • COMEX Gold 0.10 per troy ounce = $10.00 • E-mini Gold 0.25 per troy ounce = $12.50 • Micro Gold 0.10 per troy ounce = $1.00 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
COMEX:GC1!Long
by konhow
Apple and Tesla Popularity: Its in our DNA to buy high and panicBehavioral Finance explores the concept of why we are wired to make the same mistakes over and over as a species. Recently, I started reading a book called "Popular" by Mitch Prinstein , where he discusses that its in our DNA to helps us survive. We have done better by doing popular things in nature. When we go with the flow of the group and hunt together and fight together, we live better. Those outcasts who go against the group are shunned and then removed. In finance however, our popular instincts may conflict at times with our investment selection choices.
NASDAQ:AAPL
by optionfarmers
5
📌Prospect theory; what is it? Humans are not psychologically good traders by nature ! Have you ever wondered, why trading with real money is overwhelming for you?! The reason should be sought in the psychological aspect of the case. If you lose amount money in the market, you must gain several times ,so the feeling of happiness overcomes the pain of your initial loss! although all traders, even successful traders, have tasted loss and it is an inevitable part of the trading journey !But the successful traders have learned how to control the psychologically of it and not be limited by the feelings of a loss! Prospect theory : also called loss-aversion theory is a theory of behavioral economics and behavioral finance that was developed by Daniel Kahneman and Amos Tversky in 1979. .Daniel Kahneman the author of ' Thinking, Fast and Slow ' book is a Nobel Laureate in Economics who is a psychologist by training. He won the prize mostly for his work in decision making, specifically Prospect Theory. This book distills a lifetime of work on the engine of human thinking, highlighting our cognitive biases and showing both the brilliance and limitations of the human mind. This summary attempts to capture some of the more interesting findings. Based on results from controlled studies ,he describes how individuals assess their loss and gain perspectives in an asymmetric manner (see loss aversion). For example, for some individuals, the pain from losing $1,000 could only be compensated by the pleasure of earning $2,000 or even more. Thus, contrary to the expected utility theory (which models the decision that perfectly rational agents would make), prospect theory aims to describe the actual behavior of people. In the original formulation of the theory, the term prospect referred to the predictable results of a lottery. However, prospect theory can also be applied to the prediction of other forms of behaviors and decisions. Prospect theory: stems from Loss aversion, where the observation is that agents asymmetrically feel losses greater than that of an equivalent gain. It centralises around the idea that people conclude their utility from "gains" and "losses" relative to a certain reference point. This "reference point" is different for each person and relative to their individual situation. Thus, rather than making decisions like a rational agent (i.e using expected utility theory and choosing the maximum value), decisions are made in relativity not in absolutes. Consider two scenarios; 100% chance to gain $450 or 50% chance to gain $1000 100% chance to lose $500 or 50% chance to lose $1100 Prospect theory suggests that; When faced with a risky choice leading to gains agents are risk averse, preferring the certain outcome with a lower expected utility (concave value function). Agents will choose the certain $450 even though the expected utility of the risky gain is higher When faced with a risky choice leading to losses agents are risk seeking, preferring the outcome that has a lower expected utility but the potential to avoid losses (convex value function). Agents will choose the 50% chance to lose $1100 even though the expected utility is lower, due to the chance that they lose nothing at all These two examples are thus in contradiction with the expected utility theory, which only considers choices with the maximum utility. Also, the concavity for gains and convexity for losses implies diminishing marginal utility with increasing gains/losses. In other words, someone who has more money has a lower desire for a fixed amount of gain (and lower aversion to a fixed amount of loss) than someone who has less money. source: wikipedia Well, with these concepts , we conclude that Losses loom larger than gains! the Psychological value of a loss equal or even less than previous profit, can really affect our mindset , and feeling for trade, actually trading bots are better than us in this aspect, or better to say ;humans should have a proper trading system , also should cultivate our discipline and diligence to be a good trader(psychologically ) ! this article is For informational purposes only!
Education
by PRO_SMART_Trader
9