Strategy Video: Don't Be Lulled by the Comfort of Consensus
• There is a cognitive bias whereby traders seek the consensus in position and opinion
• This happens even when that view leads to losses - whereby the loss is 'okay' because everyone else lost
• We discuss how we can coach ourselves away from this irrational behavior
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When a market keeps rising, complacency and status quo can work in our favor. However, many continue to seek this consensus even when it means a dwindling account. The concept whereby someone feels comforted by a loss or losing strategy so long as 'everyone else is losing' is a cognitive bias that is rooted in socialization. As irrational as it may be to applying a profitable strategy, the contentment can be difficult to override. In this weekend Strategy Video, we discuss this cognitive bias, establish means for coaching away from it (recognizing it is the first, very important step) and use the analysis on a few areas where this concept may be running rife.
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