Poker and Stock Trading Psychology
by Alan Schoonmaker | Published: Sep 18, 2013
Stock trading psychology is more advanced than poker psychology because it’s based on much better research. James Montier’s Behavioral Finance and The Little Book of Behavioral Investing discussed much of this research. His Little Book contains a marvelous chapter, “The Perils of ADHD Investing.” Some investors seem to have Attention Deficit Hyperactivity Disorder…“an overt focus on the short term… [which conflicts] with any fundamental view of investing… Not only do we desire quick results, but we love to be seen as doing something.” In one experiment people bought shares above their fair value, even though they couldn’t resell them. “Participants were simply trading out of boredom.” Poker players frequently do the same thing.” Worse yet, “the urge to act tends to intensify after a loss.” After making a losing investment, people want to get even quickly. So do poker players. We know that “tight is right,” but it’s boring, especially ...
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