Greed and Fear - Daily trading signals based on mathematics and software, no opinion, no emotion, no ego.

dice1It has been mentioned in many posts here and elsewhere: to be successful in trading, you need a completely different mindset than the average person.

In our normal every day lifes and jobs, humans tend to behave and think in terms of certainty. Our brain likes to reason why a particular decision we make is right and we more or less expect that to come true. If that doesn't work out the way we anticipated, it feels like we've failed and failure is torture to our ego. It feels like a failure because we have put effort into it, used our intelligence and when all that is only giving us failure, then that's hard to swallow. 

Now imagine a very simple game with a dice. You and an opponent one after another try to throw the highest number with one dice. Yes, this indeed is a simple (and boring) game. How would you feel if you lose or win such a game? I would expect completely neutral either way. Why is that?

It's probably because we accept how a dice may randomly role, and accept that we don't have any influence on what comes out on top. We also have not put any personal prestige into the process of rolling the dice, so it doesn't touch on our ego when a low number comes up and we lose. Also, we know there is 1 in 6 change of hitting a particular number on the dice, so our expectation is easily set into losing several games even before we get started.

This is how a trader should view his trading activities, so by applying probability thinking instead of certainty thinking. 

Recommended reading: Does your brain accept randomness? Don't be nice to your ego  or Markets misbehaving?