There are many types of logical errors, however, the most common definition of a boolean error is the argument, in which details (seeming very logical and plausible) don't really lead to a definite conclusion. A small example of a similar error: Mike and Diana live together, which means, they are married.
In trading, such logical errors are extremely common and it is quite easy to fall into their trap., because the explanation is always extremely plausible, for example, «stock пробила новый хай, then it will go up further ". But is it true or not, this thinking is somewhat erroneous. In this particular example, we all know, that there are many factors besides position, which affect the movement of the stock.
Shortly speaking, we very often come to erroneous or flawed conclusions.
I will add, that logical errors and cognitive biases go hand in hand, and one thing often leads to another.
Distortion is the reason, according to which we react in a certain way. They are an extremely important part of our consciousness., because our brains need to make an incredible number of small, quick decisions about many things, which would otherwise take many hours of reasoning, but sometimes mistakes happen. Everyone has distortions. Не обманывайтесь, they are inherent in you too, because they are an integral part of human life.
I will list some of the cognitive biases, which are applicable to poker (although you can write an article about each of them):
- Anchoring (not to be confused with NLP anchoring) Is when you act, based on one piece of information, discarding everything else.
- The possession effect - a person's tendency to attach more importance to something, if it is in his possession. For example, The money, you invested in the bank.
- Hindsight error - the emergence of thoughts and assessments based on what has already happened. You start to count, that the hard problem was actually very easy and the like. That is, in the present you see past events extremely clear..
- The illusion of control - overestimating your own ability to control things, that happen around you. For example, market. Unfortunately, they are not dolls, which you run with threads.
- The fault of a just world is a sense of, what do you owe. Or the feeling of "triumph of justice", when you hit one of your two outs on the river.
- Restraint error - overestimating one's own ability to remain "restrained" in various situations. This applies to all people., подверженным тильту, who believe, that they don't tilt at all.
Distortion is inherent in all, but not everyone knows about it
People with certain beliefs are only looking for evidence of their point of view., discarding all that, what denies it. This is also one of the cognitive biases., called confirmation bias.
There is not much you can do about it, to get rid of this trait. Still, it did not appear by chance and is needed for survival.. However, every time you notice, that you can make this mistake, then you should force yourself to be more open to arguments.
How to avoid mistakes?
Let's divide all errors into two types, proposed by Michael Shermer:
- The first type is the belief in a lie
- The second type is denial of the truth.
I guess, что многие трейдеры имеют тенденцию к совершению ошибок именно второго типа. However, in ancient times it was a bad character trait., if you were a hunter. Confusing the roar of a tiger with the flight of a flock of birds would have been deadly in the ancient world. Mistakes of the second type in those days often meant death.. And even though on the hunt, such people are dinner for wild animals.
Avoiding Type 1 Errors
Even the biggest skeptics sometimes fall into these traps..
It is quite obvious, that no one will ever be on 100% accurate in performing actions in similar situations, but if you think, what are most often affected by this error, then you need to understand, that you believe in everything too easily. There is nothing wrong with that.
Если различные ситуации заставляют вас совершать подобные ошибки, then do not rush to the decision, spend more time taking action, be more critical of your actions.
Avoiding Type II Errors
Errors of the second type differ in that, that you, on the contrary, direct too much mental effort towards your decision, thus, breaking the principle of "Occam's razor" (when between competing hypotheses, the correct answer is usually the simplest).
I fall for this bait often enough, because I am constantly looking for a certain motive, behind the action. And if I dig too deep, I can find several conflicting motives (and none of them can be wrong).
Personally, I came to the conclusion, that making decisions shouldn't take too long. I have to trust my experience and instincts, performing the next action.
Worth adding, that recognizing and finding your own logical errors and delusions is the first step to eradicate them. Обнаружили, deliberately corrected themselves and so over and over again.
