April 1, 2018

Our brains are hard-wired to believe we can predict the future

Our brains are hard-wired to believe we can predict the future and make sense out of random patterns. In fact, it even, it even rewards us for doing so.

The brain of a person engaged in pattern seeking and prediction, experiences the same kind of pleasure that drug addicts get from cocaine or gamblers experience in a casino.

Thus our never ending search for patterns in the equity markets leads us to assume that order exists in the markets.

However the harsh reality is that stock markets are far more random and unpredictable than we like to admit.

The best traders know they have no idea what will happen next in the markets... so they are prepared for all possibilities. And they make money precisely because of this.


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