Irrational behavior: Victim mentality, risk & loss aversion
People that call themselves neuro-economists make all sorts of experiments, the ABCD questions are from Kahneman and Tversky from 40 years ago, I found these examples on stanford website.
There was another similar study, or series of studies in Lyon, France. They got people to speculate and when they dangled the carrot in front of them they basically created Bitcoin:
Some researchers looked at institution traders and found the ones taking the most risks had the highest male hormones.
I wonder how it is for the girls? They sometimes take big risks I'm sure, and let's ignore the dumb gambling mentality ones that's not who I mean.
Maybe they rather get into bonds and stick to small risks safe returns? Any degen out there?
All the big losing (famous) rogue traders are boys, so maybe there is something here, still I think the main reason is they hold bags and add to them.
Nick Lesson is a legend, a superhero, he turned a 20 thousand loss into an 800 million one, why aren't people fighting to hire him?
Can I hire the guy? Going to take his valuable advice and do the opposite. 20k into 800,000k!
Another legend is Karen the supertrader, I don't think her high T made her lose millions. Just loss aversion and being a complete psychopath.
I guess at some point it's not risk taking but loss aversion, technically/logically they are taking enormous risks out of fear of losing, but they are not logical so...
Markets have been around 4000 years and derivatives at least 10,000. And people still don't get why. It is a place for risk averse persons yes, but they are the end user, the "client", the markets help out people get rid of their risk at a price. Once again, 0 logic: It makes absolutely no sense that risk-averse and loss-averse players would try to make money in the markets.
The subject is fascinating to me, I have this impression I have dropped on an alien planet where nothing makes sense and it feels so fantastic, like I am in a Star Trek episode.
I think (I am quite certain of it) we can see this in full display with Bitcoin:
These are not winning odds...
Also notice all these Bitcoin baghodlers that like to talk a lot in hindsight NEVER tell anyone what their position is and NEVER have an idea on their profile.
Emotional (illogical) brain and low hormones (even moar risk aversion) is a bad combination...
You look at some people that lied to police to avoid losing their job or reputation and that would never have lied to get the job in the first place...
The majority always runs away from profit when it is objectively much better, and instead chooses the much smaller but guaranteed reward.
And the majority will choose taking huge not worth it risks to avoid a loss, rather than just take a small loss and be on their merry way.
I find it stunning than the majority of people could literally have the holy grail, and they would still mess it up because they are scared.
This game (obviously) is not about changing and managing your emotions. Or autists would all be billionaires it's so obvious...
Guess who these "it's easy it's all about emotions" ads are targetted to?
What it takes is thousands of hours of screen time, practice, backtesting, reading, number crunching.
The emotion stuff everyone learns about at the start is just a way to weed out the ones not meant to play this game. There are plenty other activities out there.
As far as I am concerned if an individual has it deeply rooted in their subconscious this "bug", there is no way to rewire the brain this deep.
For the (13% according to these questions lol) that have the ability to compete, it's a matter of spending the time getting good and rub hands when noobs cheerfully pile in, in a bubble or when trading gets popular in general (and then they create bubbles). The predators can abuse these cheerful greedy noobs and have a huge feast. When they baghold for ages or keep holding the price down it's less interesting though. But part of me wants to have this image of stomping noobs.
Well Bitcoin was bagheld more than usual because they saw it go up so many times before (still super irrational and still sold the bottom for the most part, somehow XD), but hey they are pumping the S&P like the Nasdaq in 2000 right? The noobs are also going to sell GME fast right? After buying it up fast. (Sad I can't short).
I don't think this info is really useful to be honest, the people without the illogical bug won't get much out of it (it's cool to know where the illogical as regulators say "inefficient" patterns come from), the people with the illogical bug will be in denial and convinced they are part of the winners.
Is this anything more than an ego stroke and having a laugh while belittling illogical risk averse people?
Well I think it's interesting, and plenty of scientists do too.
There was another similar study, or series of studies in Lyon, France. They got people to speculate and when they dangled the carrot in front of them they basically created Bitcoin:
Some researchers looked at institution traders and found the ones taking the most risks had the highest male hormones.
I wonder how it is for the girls? They sometimes take big risks I'm sure, and let's ignore the dumb gambling mentality ones that's not who I mean.
Maybe they rather get into bonds and stick to small risks safe returns? Any degen out there?
All the big losing (famous) rogue traders are boys, so maybe there is something here, still I think the main reason is they hold bags and add to them.
Nick Lesson is a legend, a superhero, he turned a 20 thousand loss into an 800 million one, why aren't people fighting to hire him?
Can I hire the guy? Going to take his valuable advice and do the opposite. 20k into 800,000k!
Another legend is Karen the supertrader, I don't think her high T made her lose millions. Just loss aversion and being a complete psychopath.
I guess at some point it's not risk taking but loss aversion, technically/logically they are taking enormous risks out of fear of losing, but they are not logical so...
Markets have been around 4000 years and derivatives at least 10,000. And people still don't get why. It is a place for risk averse persons yes, but they are the end user, the "client", the markets help out people get rid of their risk at a price. Once again, 0 logic: It makes absolutely no sense that risk-averse and loss-averse players would try to make money in the markets.
The subject is fascinating to me, I have this impression I have dropped on an alien planet where nothing makes sense and it feels so fantastic, like I am in a Star Trek episode.
I think (I am quite certain of it) we can see this in full display with Bitcoin:
These are not winning odds...
Also notice all these Bitcoin baghodlers that like to talk a lot in hindsight NEVER tell anyone what their position is and NEVER have an idea on their profile.
Emotional (illogical) brain and low hormones (even moar risk aversion) is a bad combination...
You look at some people that lied to police to avoid losing their job or reputation and that would never have lied to get the job in the first place...
The majority always runs away from profit when it is objectively much better, and instead chooses the much smaller but guaranteed reward.
And the majority will choose taking huge not worth it risks to avoid a loss, rather than just take a small loss and be on their merry way.
I find it stunning than the majority of people could literally have the holy grail, and they would still mess it up because they are scared.
This game (obviously) is not about changing and managing your emotions. Or autists would all be billionaires it's so obvious...
Guess who these "it's easy it's all about emotions" ads are targetted to?
What it takes is thousands of hours of screen time, practice, backtesting, reading, number crunching.
The emotion stuff everyone learns about at the start is just a way to weed out the ones not meant to play this game. There are plenty other activities out there.
As far as I am concerned if an individual has it deeply rooted in their subconscious this "bug", there is no way to rewire the brain this deep.
For the (13% according to these questions lol) that have the ability to compete, it's a matter of spending the time getting good and rub hands when noobs cheerfully pile in, in a bubble or when trading gets popular in general (and then they create bubbles). The predators can abuse these cheerful greedy noobs and have a huge feast. When they baghold for ages or keep holding the price down it's less interesting though. But part of me wants to have this image of stomping noobs.
Well Bitcoin was bagheld more than usual because they saw it go up so many times before (still super irrational and still sold the bottom for the most part, somehow XD), but hey they are pumping the S&P like the Nasdaq in 2000 right? The noobs are also going to sell GME fast right? After buying it up fast. (Sad I can't short).
I don't think this info is really useful to be honest, the people without the illogical bug won't get much out of it (it's cool to know where the illogical as regulators say "inefficient" patterns come from), the people with the illogical bug will be in denial and convinced they are part of the winners.
Is this anything more than an ego stroke and having a laugh while belittling illogical risk averse people?
Well I think it's interesting, and plenty of scientists do too.