Trading Psychology | Bias vs. Truth (Trader Tip)


Hindsight bias, let’s talk about it. This is a very, very important topic and concept to understand because what it’s going to do is it’s going to, let me take a step back. This is all coming from your ego. Now I don’t mean ego in the sense of you think you’re hot stuff. You know, you walk around like
this, “Look at me, ladies.” You know, not that type of ego, but just ego on the sense of at the core, you do wanna feel good about
yourself at the core, core. And that’s your ego’s job, to make you feel good about yourself. So because of that, you
need to be very aware of this hindsight bias that
is going to make you think that you are a much better trader. It’s gonna make you think that you have much better analysis skills. It’s gonna make you think
that you’re ready for trading or ready for, I mean
really, anything in life, but in trading, a lot
quicker, a lot sooner than what you already are. And I get this quite a bit. And I think I’ve done videos on this, but it’s been awhile. Regardless though, I
got a comment on YouTube in regards to one of my live trade videos. And these always make me laugh. And I don’t laugh in a judgemental way, just in a way of, “Good
old hindsight bias,” that they really don’t actually realize is affecting their thought process. So here they are saying, “Well you know, you should’ve done this, “and you should’ve that.” I was like, “Well wait a second. “Yeah, you’re right, that’s
good advice you’re giving.” I know that in your mind you
know that it’s good advice, but why is it good advice? Why are you able to give
me that good advice? And that’s because of hindsight bias. So let me read through this real quick and then I’ll break it
down a little bit more. So I lied, this comes
from Facebook actually. But anyways, “CenterPoint,”
who is a broker, “didn’t have the shares
to borrow this morning. “Missed out.” So I said, “Missed out on what? “Getting steamrolled?” Because this thing was an
absolutely monster mover to the upside. They replied back. Or somebody else replied back, “Missed out living under a bridge?” ‘Cause again, the stock
that they’re commenting on made a huge move. And then they replied back, “Missed out on the short back down.” So let’s map out the situation here. A stock went, like I said, a huge move up. Yeah, there’s no doubt about it. But then yeah, it did
eventually come back down. So what is this person saying? “Aw, if only I had shares to short.” And if you’re new, shorting means you just make money when prices go down. Well yeah, that’s great if
you had shares to short. But I mean what happens if you
were to short it right there? That wouldn’t have been a good situation. What happens if you would’ve
shorted right there? That’s getting steamrolled. That’s called living under the bridge like these people are commenting. But what was this person? No, no, no. “If only I had the shorts,
I would’ve shorted, “you know basically on the way back down.” Well wait a second, you
know that it’s quote-unquote the way back down because you
already know what happened. That’s why you know
it’s the way back down. At the time, you didn’t know
that any of that existed. You didn’t even know that that existed. For all you know, you could’ve thought or this person could’ve thought that right there was the
point where, all right, it’s about to head back down. When you don’t have
hindsight in your favor, then yeah, you have no idea. For all you know, that was the very top. But when you do have hindsight, you’re gonna be biased
towards, like I said, the ego. Making yourself think, making yourself see things in a way. And then this person, they’re
seeing the situation of, “Aw, I coulda made so money shorting it.” Because, well, yeah you know
it eventually want back down. So of course you’re voice is gonna say and your ego’s gonna say,
“Yeah, and you know what? “You would have been
shorting right up there, “right before it went back down “and you would have made so much money “if there were shares.” Your ego is not gonna say,
“Ah, if you had shares, “man, you coulda shorted it right there “and then got absolutely roasted.” That’s not how the hindsight bias works in the sense of trying to figure out, would I have made a
profitable trade on it? Most cases, it’s gonna be this situation where, “No, no, no, I’m disappointed “not because I would’ve been roasted, “but because I woulda shown up “prior to the exact perfect time. “I would’ve waited, “and then I woulda gotten
confirmation and shorted.” Again, think about that
word, confirmation. The only reason you would know
to define it as confirmation as his mind, his ego is
gonna find some sort of spot that yeah, to be fair, probably
was a point of confirmation. But what it’s gonna ignore
is all the other false bits of confirmation
where right there maybe, let me change up the color. Maybe right here was a
potential area of confirmation that wasn’t actually confirmation ’cause, well it kept going up. And then uh-oh, there’s
another false signal for a top. And it kept going up. So of course, he’s gonna
focus on the real, true signal that the top was finally in and use that as his confirmation point. So you have all these false signals, but the ego, your mind,
when you have hindsight, it’s just gonna nope. I’m not gonna, nope, nope. Ah, that was the real one. Yep, that’s where I would been. And all of a sudden, they think
that they would have played the trade much better
than what they would have. Now maybe they would have
played it pretty well, but my point is to sit there and wish you had shares to short on
something that went crazy and then for you to automatically assume, “Well yeah, I woulda
shorted it on the way down.” Yeah, but you didn’t know where the way down was at that point. You would have no idea. And that person is
getting a false mentality towards their approach to the market. And that’s what I mean by dangers ’cause if you think you’re
better than what you actually are because of this hindsight bias, then you’re gonna get out there when you don’t have
hindsight in your favor. And that’s gonna be
like, holy, I don’t know, is it on the way back down? Is it still going up? I don’t know. I have no idea if it’s
on it’s way back down. Is this where I short? And it’s a whole lot different when you don’t have
hindsight in your favor. So just be aware of that. It’s a very tricky thing. But if you find yourself
kind of commenting or you just find yourself really thinking, “Oh, I woulda nailed that.” Well why do you think
you woulda nailed that? Are you sure you’re not saying you would’ve nailed it
because you now know exactly what happens? So you’re ignoring a bunch of things and just focusing on the one thing. But yeah, it would have worked out. I mean, that doesn’t make you stupid. That doesn’t make you a moron, that just makes you a human being. That’s how the mind works,
hence hindsight bias. So be very aware of
that ’cause this causes way too many people, myself included, to rush into trading sooner
than what they should be because the voice is like,
“Oh, yeah, yeah, you’re good. “Yeah, you’re good, you’re ready.” But you’re not ready. So just be very careful of
this psychological concept of hindsight bias. First off, thanks so much for
watching the entire video. Real quick, before you go, I wanna invite you to a live webinar, web class, training,
workshop, online event, whatever you wanna call it, but it will be me, live, revealing to you what I’ve discovered that has
allowed me to transform myself from being an employee
to being my own boss. Including how I had only one losing day out of 73 days in total. I’m going to cover three
keys that have helped me unlock profitable consistency
within the markets. The first key is super weird, but in a productive type of way. The second key is super awesome, because it, quite literally, is wired into our DNA as humans, making it very easy to use. But in a cruel way, this becomes
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pitfall that it creates for some. And yeah, the third key when you hear it sounds way too good to
be true, but it’s not, and I’ll show you how it all works. Then at the end, I open it up for a question and answer session that is, again, totally live. Even if you can’t make the live session, please still sign up
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this truly is a live event. If you have any questions, let me know. If not, I’ll be seeing you soon.

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