Trying to develop skills in the new area, people often think of analogies. Analogy can be used to integrate new information with old. By analogy, it is concluded that, if two or more things are similar in some respects, they are similar in other respects. There is a very human tendency to use previously acquired skills in learning new. It is easier to understand a new topic, if it can be associated with already studied. This is especially true in trading. Trading in the markets – a difficult lesson, and it is easier to learn, if we associate it with familiar themes: that is, we can easily understand trading, thinking of analogies.
“I’m sure that Amazon in the next month will rise considerably,” said Tom to his friend Fred during the coffee break. “Why do you think so?” Skeptically asked Fred. Tom says: “in next month’s classes begin, but students and teachers need to buy books, it should increase sales, and hence the share price.” Fred retorts: “Maybe, but it might not be so easy. This is just one of many possible factors, but the price may depend on a number of other reasons that you probably missed. Disillusioned little support for his friend, Tom yells, “You’re such a pessimist.”