This PDF takes a look at how behaviour biases in your investment strategy may lead to very costly errors.
Successful Investor Psychology
Excerpts from TurtleTrader on how Richard Dennis handled behavioral investing:
Profits like those for Dennis came with heartburn. He was down $10 million in a single day that year before bouncing back, a roller-coaster ride that would have made mere mortals lose serious sleep. Yet Dennis cockily said that he slept like a baby during all that volatility.2
His moneymaking style was about mammoth home runs and many smaller strikeouts. If there was a “secret,” he knew that you had to be able to accept losses both psychologically and physiologically. Still, 1986 was a long time ago, and memories dull when an old pro starts talking about the benefits of taking “losses.”
Dennis and Psycology
Not only was his persona different, his trading was different. Dennis read Psychology Today (no government economic or crop reports for him) to keep his emotions in check and to remind him of how over- rated intuition was in trading. He took delight in boasting, in contrast to most traders who got up early to read all they could from weather reports to daily Department of Agriculture assessments, that he stayed in bed until the last minute before getting to the exchange just as trad-ing started
The Psychological reality of being a Turtle Trader Investor
The fear of not knowing what to expect next was a constant in the Turtles lives. Turtles would get calls without explanation to increase or decrease 20 percent of their account size. They scratched their heads, wondering what was going on. Some Turtles joked that perhaps they were in a cruel psychological experiment. Others seriously considered the possibility that they were being filmed like Jim Carrey in the Truman Show.
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