Apr 16 2007
How Doctors Think
How Drs think is written by Harvard hematologist Jerome Groopman. Woodie likes to say that it takes 3 years to become a lawyer and 4 for a doctor, what makes one think he’s going to become trader over night? Dr. Groopman learned that 80% of medical mistakes are the result of predictable mental traps, or cognitive errors that bedevil all human beings. Sounds familiar to traders? The four common errors committed by the drs are: 1) I recognize the type, 2) I just saw a case like this, 3) I’ve got o do something and 4) I hate (or love) this patient. I think many traders do the same when they: 1) I recognize the pattern, regardless if all the criteria for entry are met; 2) I just saw a pattern like this, when few ZLR had been just taken, but forgot the 3rd one often is the problem child; 3) I’ve got o do something when there isn’t a pattern or trade in sight, but you’ve got to do something, so using Woodie’s say … creating a trade which always leads to loss; and 4) I hate (or love) this patient, getting emotional about trading, which one shouldn’t be.