Take his incompetence to be the premier trader, you need to clearly understand their own limitations. But most novice traders do not know. For example, a behavioral economist Dr. Terrance Odean found that online investors tend to trade beyond their experience. They have no accurate picture of what they can and can not do. Such a distorted exaggeration of abilities is not characteristic only for traders. This is a widespread phenomenon. Studies show that when you are trying to assess how well your activity Trader-beginner, your intuition is better not to trust.
Dr. David Dunning (Dr. David Dunning) and colleagues (2003) in a recent article in “of ongoing work in psychology” (Current Directions in Psychological Science) shows that most people are “blissfully do not know their incompetence.” This desire to overvalue their abilities was noted in several studies. When people are asked to be tested for abilities such as logical reasoning or grammar mistakes, they tend to overvalue their work: they think their above-average rate (60% and above), although in reality it does not exceed 25%. This shift is not limited to tests. People tend to overestimate their work in various fields. Hunters believe that they know more about firearms than is in reality, but doctors think that they no longer know how to accurately diagnose patients than in reality. Tests have shown even that, when people offer money for an accurate assessment of their work, they still can not do.
Dr. Dunning and his colleagues believe that poor performers are doubly punished. Moreover, they do not work, but they still lack the psychological ability to feel what they are doing poorly. So what distinguishes them from the good performers? Poor workers begin with a belief that they – “good performers”, and in no hurry to develop a method of assessing their work. Good workers, by contrast, try to objectively, accurately measure their work and avoid worrying about “good” or not. Indeed, studies show that they actually underestimated their work. When they see other people’s results, they wonder how well they have coped in comparison with others.
Fortunately, bad employees are not doomed to remain at the bottom. In their experiments, Dr. Dunning has shown that when poor performers show how poorly they work, and give instructions on how to improve their skills, their results are improving and they are more accurately assess their work. These studies suggest the way in which new trader can improve their achievement. First of all, you need to know that an intuitive assessment would be extremely overpriced, and take active steps to overcome it. Secondly, you need to create an objective indicator of the results of your trade, such as the trader’s diary, so that you know exactly how well you sell. Third, increase your level of knowledge. To the extent that will grow as experience, evaluation of their work will become more accurate. Remember that. Objective and accurate assessment of your abilities is vital to successful trading.