Hanlon's Razor: How It Will Make You A Great Day Trader!

Hanlon's Razor: How It Will Make You A Great Day Trader!

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let's talk some science that is 100 practical for us as day traders and not even day trading swing trading investing but this little bit of science this little bit of just kind of understanding the human mind our emotions our behaviors really will help you in terms of hey how do i become great at day trading how do i become better at day trading or swing trading or investing well hanlon's razor is an amazing amazing description of what i love to do of what many people love to do because it's human nature it's how our brains are wired but when you understand this wiring you can begin to see and operate in manners that are like okay wait a second wait a second that's that's not gonna actually help me get better as a trader if i'm letting hanlon's razor take over if i'm allowing this to all influence me because the way it does influence me like i said i i love to do what hanlon's razer says people do because i i guess i'm a halfway rational and logical human being but if you operate and you know maneuver under the assumptions that are made it's going to hold you back and it's going to hold you back as a trader because you're going to be blaming the wrong things and the worst part is these things that you're blaming are totally out of your control so under that premise it's basically impossible for you to get better at day trading if you're blaming things that you have no control over anyways but this is what's so freeing what's so great about this is but no no even though your mind wants to do that it's not actually true and i found this article out there and you're more than welcome to do more research on it of course but i thought this article does a great job with it and i'm not going to read every single bit of the article but i want to go through some points and now of course this is not a you know a psychology principle geared towards day traders in the stock market or anything like that but it's it can certainly and should certainly be applied to it so handling razor relax not everything is out to get you hanlon's razor teaches us to not or teaches us not to assume the worst intention in the action of others understanding hanlon's razor helps us see the world in a more positive light stopping negative assumptions and improve relationships let's take a look at some examples now our relationship is going to be a relationship with a trade right that's the relationship that all of us and again whether it be day traders swing traders have right now in most cases relationships you'd say oh yeah like with another human being but no no no you can have a relationship and you should have a relationship with your trades because that that's that's how you're going to understand what's going on that's gonna how you improve kind of but again that's where understanding this is going to help us in our relationship not with other people but with trades if you ever feel that the world is against you you are not alone i think we've all been there we all have a tendency to assume that when anything goes wrong the fault lies with some great conspiracy against us a co-worker a co well there we go a co-worker fails to give you a report on time they must be trying to derail your career and beat you to a promotion your child drops and breaks an expensive plate they must be trying to annoy you and waste your time wi-fi in a coffee shop not working the staff must be lying about having it to lure you in and sample their crappy expresso how about this you take a losing you make a losing trade you lose money oh it was those market makers oh it was that evil oh it is the rich oh it is insert blank of some sort of exterior thing that caused you to lose money in the trade have you ever been there i have oh it's so easy to take a losing trade and oh and then point the figure outward there was something else out there that caused me to lose money in a trade i said i can admit it can you can you do you have the tendency do you like to try to find some sort of other reasoning point the finger at who knows what like i said market makers you know the rich the hedge funds the you know oh it was reddit oh it was this social media group oh it was this that just put some external force and really i mean there's gonna be some sort of probably conspiracy element with it but i mean have you been there but the simple fact is that these explanations which we tend to jump to are rarely true maybe your co-worker thought today was tuesday not wednesday maybe your child had sticky hands from plain play-doh maybe the wi-fi router was just broken this is where hanlon's razor comes in so maybe just maybe and well i won't get to the trading example yet but what is hanlon's razor hanlon's razor is a useful mental model which can be summarized as never attribute malice that which can be adequately explained by neglect i'm going to say that again never attribute malice that which can be adequately explained by neglect so in other words for us maybe just maybe i'm throwing it out there maybe there was no external malice behind you losing money maybe somebody was not manipulating a situation against you so they could take your money maybe just maybe it was you having some neglect neglect to what well neglect that dare i say you just didn't have a good trade plan dare i say that maybe you got a bad entry point dare i say that maybe you should have cut the loss a long time ago and you didn't is that a possibility is it a possibility that the real problem was not malice by some external force but just your own neglect towards the relationship with that trade and we've all been there i put together bad trades i still put together bad trades i'd like to think that it it's really ha it happens much less often nowadays but when i was getting started oh boy did i neglect that relationship with my trades and yeah it was not a good situation so like occam's razor this heuristic is useful tool for rapid decision making and intelligent intelligent cognition applying hanolin's razor in our day-to-day day-to-day lives so let's think about this through our day-to-day lives as a swing trader as a day trader allows us to better develop relationships become less judgmental and improves rationality that's always a good thing at visit trader hanlon's razor allows us to give people the benefit of the doubt and have more empathy in this way the value of hanlon's razor is pronounced in relationships and business matters and for us as traders you know what it's empathy towards yourself in all actuality because it's giving us the freedom it's giving us the hope that hey you know what yeah i lost some money but you know whose fault what is it well it wasn't some external fault it was my fault it was my neglect of the relationship and it was just acknowledging the fact that you know what at the end of the day whatever market you're trading stock market crypto market forex market futures market options market there's no guarantees there's no guarantee so even if you don't neglect the relationship even if you really do put together a solid trade plan you could still lose but that does not mean that some sort of external force is out there to get you right it's a simple fact that most of us spend a large part of our day communicating with others and making choices based on that now a little different for us our choices are based on well for me i can only speak for myself the technical chart i'm a technical trader so that's what my choice you're going to be based on if you're a fundamental trader maybe your choices are based on income statements cash flow statements you know all that sort of stuff we we all lead complex lives wherein as murphy's law states things are constantly going wrong when this occurs the common response is to blame the nearest person and assume they have malice intent people are quick to accuse corporations politicians their bosses employees coffee shop workers and even family of trying to derail them sounds like me sounds like something i like to try to do every now and then not necessarily just in trading but in life it's very easy to fall into when someone messes up around us we forget how many times we too have done the same we forget how many times we have elbowed someone in the street knocked over a drink at a relative's house or forgotten to meet a friend at the right time instead the perpetrator becomes a source of intense irritation to assume intent is such to assume intent in such situations is likely to worsen the problem yes it's likely to worsen the problem right if all you do if all i do as a trader is attribute malice intent to some sort of external force how is that gonna help me be better if all if if this stuff is going on and it's out of my control how is that gonna allow me to get better as a day charter it's not because under that premise it's it's under it's not my control so there's nothing i can do about it none of us can ever know what someone else wanted to happen the smartest people make a lot of mistakes inability or neglect is far more likely to be the case than malice when a situation causes us to become angry or frustrated it can be valuable to consider if those emotions are justified and for us are those emotions justified at the right place that's really the big distinction here at the right place often the often the best way to react to other people causing us problems is by seeking to educate them not disdain them in this way we can avoid repeats of the same situation now that's where there's a little small disconnect but not much meaning yes we need to be frustrated we need to feel emotions but our justification again when a situation causes us to become angry or frustrated like losing money it can be valuable to consider if those emotions are justified or in other words is your frustration justified in the right direction are you blaming yourself are you frustrated with yourself oh i knew better than that clay i chased the price it was going up and up and up fomo got me fear of messing out oh i'm frustrated at myself yes in that case it make sure you are justified in terms of where you're directing it because if you're directing until a third person a malicious intent out there that's that's not justified you're justifying those emotions in the wrong location because why do we want to why do we want to make sure that we're justifying them in the right location because often the best way to react to other people but to ourselves causing the problem because again if we're blaming ourselves then we are the cause of the problem is by seeking to educate them or educate ourselves right because if we're acknowledging that yes we are the problem yes that's why i'm frustrated because i am the problem how awesome is that why because if we're the problem if you're the problem then you can educate yourself you can fix it you can become a better trader but if you're too busy out there always blaming others then you're never going to get better because well you can't get better because according to you it wasn't my fault it wasn't my fault in the first place well that's a very depressing spot to be in because if it's not your fault then that means that you're not the problem and if you're not the problem that means that you're not the solution which means it's hopeless hanlon's razor nails it here so educating them so don't and like i said don't i mean disdain yourself yes but don't like hate yourself be frustrated yourself be irritated yourself i don't but i don't want to tell you to like hate like to hate yourself but just yes be frustrated with yourself oh i knew better than that or oh i'm getting i need to learn i need to educate myself that's fine that's going to direct you in the right spots so and i'm not going to go through all these but there's all sorts of this but this is a one that i see all the time in trading especially with hindsight but confirmation bias so we all have a tendency to look for information that confirms pre-existing beliefs when cognitive dia diagnosis arises dissonance there we go see i'm not that smart when cognitive dissonance arises we aim to realign our world views overcoming confirmation bias is a huge step toward making better choices motivated by logic not emotions hanlon's razor assists with this if we expect mal's intent we are likely to attribute it wherever possible for example if someone sees a certain politician as corrupt they will look for information which confirms that they become unable to identify when mistakes are the result of incompetence or accident and this is massive because what happens what did i used to do what may you be doing you seek out peep others that are saying yeah it was those market makers yeah it is those hedge funds yeah it is the it is it's that reddit board it's wall street bets they're just too powerful and you will seek out other people echoing that right confirming your bias but that's not going to as it says that's not going to lead you to where you want to be because all it's going to do is reaffirm those false beliefs which as we whoops as we've already talked about are not going to allow you to get better but this is where it's very important is if you become unable to identify when mistakes are the result of incompetence or accident that's really bad and that's why and i'm not going to turn this into a sales pitch for from from my chat room i'm just going to talk about my chat room because i know how it operates there might be other great chat rooms out there too that operate the same uh and i'd encourage you okay then join them but this is where my chat room comes into play because we're not going to allow that confirmation bias to play out if you come to us and you start to throw out mal's intent to third parties the the group as a whole is going to be like are you sure or maybe you just had a bad trade plan welcome to the club we all have bad trade plans every now and then that's what you're gonna hear so that's gonna give you and that's why it's very important who are you surrounding yourself with are you surrounding yourself at the end of the day with people that just pat you on the head and tell you exactly what you want to hear because that is confirmation bias to a t you seeking out places that are going to find tell you just what you want to hear oh yeah you lost money it was it was a hedge fund's fault it was the market maker's fault it oh that that that wall street bets all those apes got together and they oh yeah or maybe you just had a bad trade plan which is not pleasant to hear to hear that you were the problem is not pleasant who likes to hear that i don't but when you stop and think about it how freeing is it how awesome is it that if you are the problem that means you are also the solution and that's what hanlen's razor also comes into play and then also just i want to go over this one from bias disliking hating halon's hanlon's razor can provide insight when we deal with people institutions or entities we dislike the more we dislike someone or something the more likely we are to attribute their actions to malice when someone we dislike makes a mistake reacting with empathy and understanding tends to be the last response acting in an emotional way is natural yet immature it can only worsen the situation the smartest solution is no matter how much we dislike someone to assume neglect or incompetence and i mean how easy is it to just get so you know hateful and just dislike almost anything and everything that is not your trade plan right when you lose money this that and it just there can be that intenseness that goes out of control right here and it's very human to want to eat totally wracked with your emotions but you got to remember that don't i know the one thing that you better be disliking again i don't mean yourself as a person i mean yourself and maybe that trade plan which ah i dislike i'm hating oh i chased the price i should not have done that fomo got me hey you know what fomo got you that's all right at least you're the problem because you can not fomo the next time and hanlon's razor is gonna help you make sure that your mind is focused and make sure your mind is blaming the right things so i will link this article below uh you know there's a lot of other things that it talks about here and you know makes a lot of good points here but like i said there's or just run a google search on it uh but at the end of the day all i want to throw out there and all and i'm preaching myself just as much as uh you know hopefully you and but just make sure let's let's make sure we blame the right thing because when you blame the right thing and especially in trading the right thing is you the trader you become the problem sure not pleasant but you also are the solution and that is freeing because when you blame yourself you acknowledge that you are at fault as the headlines razor says okay now you know that you can educate yourself to get better and that's what it's all about blame yourself so that you can educate yourself and get better be the problem so that you can also be the solution so i i absolutely love handling razer i think it does a fantastic job and it's something that we all need to hear from time to time and especially like i said confirmation bias if you're out in those message boards communities it is easy to find yourself in an echo chamber where all you hear about is the manipulation of the hedge funds and market makers and all of these things that you're attributing malice to which at the end of the day maybe you just didn't have a good trade plan is is that possible hopefully you would say yes it is and i'm going to start to educate myself perfect so be careful be careful of those echo chambers and if all those echo chambers do are telling you what you want to hear maybe just maybe you're suffering from confirmation bias and this confirmation bias you were using to confirm hanlon's razor about attributing thing attributing malice to an external force source and we don't want to do that now a request for me i know this was more science-based went through an article but if you enjoy these videos and would like for me to do more of them then a couple easy ways to do that hit that like button and then also leave a comment below even if it's just like a thumbs up emoji any sort of emoji rocket chip emoji and ap emoji diamond hands emoji any of those emojis and then hitting the like button communicates to me that you do like these videos and that always helps out and also check out the channel as a whole good variety of videos and hopefully like what you see enough after seeing all those to hit that subscribe button as i would love to have you as a subscriber to the channel but yes get out there be aware of hanlon's razor and apply it and make sure that you are the problem therefore you're the solution you can begin to educate yourself first off thanks so much for watching the entire video real quick before you go i want to invite you to a live webinar web class training workshop online event whatever you want to call it but it will be me live revealing to you what i discovered that has allowed me to transform myself from being an employee to being my own boss including how i had only one losing day out of 73 days in total i'm going to cover three keys that have helped me unlock profitable consistency within the markets the first key is super weird but in a productive type of way the second key is super awesome because it quite literally is wired into our dna as humans making it very easy to use but in a cruel way this becomes a pitfall for many traders i'll explain it all though including how to avoid the pitfall that it creates for some and yeah the third key when you hear it sounds way too good way too good to be true but it's not and i'll show you how it all works then at the end i open it up for a question and answer session that is again totally live even if you can't make the live session please still sign up as it will be recorded and you can go back and watch the replay that i will send you click the image on the screen or click the link down in the description box so you can get the date and time and claim your spot which i should note is limited due to the fact that this truly is a live event if you have any questions let me know if not i'll be seeing you soon

2021-06-01 13:25

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