Blink: The Power of Thinking Without Thinking by Malcolm GladwellBy on 2011 May 8 Sun 13:53:22
Summary: Giving us convincing arguments and examples to think differently and to focus on developing expertise as oppose to keep gathering more information. Good read overall. If you find yourself distracted into looking for the next holy grail easily, you need to read this book.
Blink: The Power of Thinking Without Thinking
It is not really a trading related book review because I have the book for quite some time already and the book is general interest good read.
The reason I mentioned this book here is that many cases mentioned in the book that differentiate someone with expertise in a subject vs. others who cannot tell the differences or gain insights in specific situations is often due to one or more of the following reasons,
- normal people are overwhlemed by the information and using logical thinking on everything gathered result in bad jdgements and/or slow decision making
- normal people seek for more information and analysis so that they can be confident with their decisions, but then the most important clues are forgotten in the process
- normal people tend to outright reject the idea that less is more because they do not know which few pieces of information to look for
- normal people fail to think scientifically to distill the information at hand to find out the few key pieces of information
Isn’t that something equally applicable to traders?
Most successful traders I have met stick with the same set of tools for years. As oppose to look for the next best thing, they became expert in using the few selected tools for analyzing the markets they trade.
The tools they use include moving averages, oscillators, point and figure charts, trendlines, etc. You name it, many of them use it. The key point is that they know their tools better than almost everyone else around them.
Not only do they know when to trust their tools, they also know when not to read too much into them.
To illustrate the point, here is a story. A friend of mine, floor trader, on the day that Nasdaq 100 looks every bit bullish back in year 2000 holding above several daily moving averages, said, “The moving averages do not look right – don’t pick bottom.”
I am still very glad that I did not pick bottom on that day – it was one of the biggest single day drop in history.