Enhancing Performance With Bias Awareness

David BlairDavid Blair, General Comments, Guest Blog, Trading Psychology1 Comment

******One blogger/trader/educator who does a wonderful job of sharing research on elite performance and how it relates to trading is David Blair, The Crosshairs Trader. SMBU thought a Sunday Links post from him would be of interest to the SMB Trading Community. Below is his first for you. We hope you enjoy!******* Editor’s note

A cognitive bias is ever present when making decisions. There are numerous cognitive biases, particularly when decisions are required under duress or in an environment of uncertainty, much like we find when making stock trading decisions, where uncertainty is ever present and the pressure to act and react a constant variable.

The veteran trader knows that technical analysis serves little purpose when cognitive biases are ignored; therefore, the serious trader studies the market only after an honest self assessment of the possible cognitive biases affecting the next trading decision.

The following articles on cognitive biases can guide us in the study of the self and, in turn, better help us navigate and understand the patterns and habits that our very biases create in the first place.

  1. A visual study guide to cognitive biases
  2. Investors’ 10 Most Common Behavioral Biases
  3. Exploiting Cognitive Biases For Positive Gain — 47 Cognitive Biases
  4. “A key idea in psychology is that you are less likely to fall prey to information-processing biases if you are fully aware of those biases.” —  Brett Steenbarger
  5. “Learning how to say no is one of the most useful skills you can develop, especially when it comes to living a more productive and healthy life.” — A Scientific Guide to Saying No
  6. “Some social psychologists believe our cognitive biases help us process information more efficiently, especially in dangerous situations. Still, they lead us to make grave mistakes. We may be prone to such errors in judgment, but at least we can be aware of them.” — The 12 Cognitive Biases That Affect Your Rationality
  7. “Perception is reality in the financial markets.” — 12 Ways Traders Let Their Brains Get in the Way of Rational Investing
  8. “In the highly anticipated Thinking, Fast and Slow, Kahneman takes us on a groundbreaking tour of the mind and explains the two systems that drive the way we think.” — Daniel Kahneman, How We Think
  9. “Becoming mindful of these common cognitive distortions will help you understand yourself and other people better, and improve your decision making.” — 50 Common Cognitive Disorders
  10. “All else being equal, not many people would prefer to destroy the world.” — Cognitive Biases Potentially Affecting Judgment

David Blair



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One Comment on “Enhancing Performance With Bias Awareness”

  1. Interesting but a bit impractical, I mean if you have to consider more than 100 factors on your psychological decisions model even if you are aware of ALL of them I think you will never achieve success consciously, there are some articles that summarize some of them, how ever no strategies to overcome them

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