I went to the ANZ E-Trade Cocktail event to see Steve Johnson from the Intelligent Investor (www.intelligentinvestor.com.au) speak. To be honest it went totally above my head. I had no clue what on earth he was talking about.

Afterwards I had a little chat with him and it turned out that he had no clue what I was on about when I spoke about my strategy with technical analysis.

But… the one thing we both agreed on was not just the importance, but also the fascination of trading psychology. It turned out that we are into the same books and very much had the same approach to it in the context of his investing and my trading, interesting huh?

Hey, I’d encourage you to join his 15 day free educational newsletter. I really thought it was good value.

May today bring you lots of intelligent enlightenment 🙂

Mandi

Check out those 10 brainteasers to test your mental sharpness that I have found in an Forbes Magazine article.

1. Johnny’s mother had three children. The first child was named April. The second child was named May. What was the third child’s name?

2. A clerk at a butcher shop stands five feet ten inches tall and wears size 13 sneakers. What does he weigh?

3. Before Mt. Everest was discovered, what was the highest mountain in the world?

4. How much dirt is there in a hole that measures two feet by three feet by four feet?

5. What word in the English language is always spelled incorrectly?

6. Billie was born on December 28th, yet her birthday always falls in the summer. How is this possible?

7. In British Columbia you cannot take a picture of a man with a wooden leg. Why not?

8. If you were running a race and you passed the person in 2nd place, what place would you be in now?

9. Which is correct to say, “The yolk of the egg is white” or “The yolk of the egg are white?”

10. A farmer has five haystacks in one field and four haystacks in another. How many haystacks would he have if he combined them all in one field?

How did you go? You can find the answers here http://www.forbes.com/sites/work-in-progress/2012/05/15/10-brainteasers-to-test-your-mental-sharpness

This little test is a great example of how our natural decision making is massively influenced by the brains habitual filtering processes of distortion, generalisation, filtering for sameness or differences etc. If you are not aware of how the mechanics of your brain operate, you will be at the mercy of it. However, if you learn to understand the workings of your brain just like you would study the mechanics of high performance athletes in your chosen sport, you will be able to deliberately influence and use your brain to create profits.

I just read an interesting article on http://www.newyorker.com/online/blogs/frontal-cortex/2012/06/brain-experiments-why-we-dont-believe-science.html#ixzz1z5kOiuCU.

Here is an excerpt: “In a 2003 study, Kevin Dunbar, a psychologist at the University of Maryland, showed undergraduates a few short videos of two different-sized balls falling. The first clip showed the two balls falling at the same rate. The second clip showed the larger ball falling at a faster rate. The footage was a reconstruction of the famous (and probably apocryphal) experiment performed by Galileo, in which he dropped cannonballs of different sizes from the Tower of Pisa. Galileo’s metal balls all landed at the exact same time—a refutation of Aristotle, who claimed that heavier objects fell faster.

While the students were watching the footage, Dunbar asked them to select the more accurate representation of gravity. Not surprisingly, undergraduates without a physics background disagreed with Galileo. They found the two balls falling at the same rate to be deeply unrealistic. (Intuitively, we’re all Aristotelians.) Furthermore, when Dunbar monitored the subjects in an fMRI machine, he found that showing non-physics majors the correct video triggered a particular pattern of brain activation: there was a squirt of blood to the anterior cingulate cortex, a collar of tissue located in the center of the brain. The A.C.C. is typically associated with the perception of errors and contradictions—neuroscientists often refer to it as part of the “Oh shit!” circuit—so it makes sense that it would be turned on when we watch a video of something that seems wrong, even if it’s right.

So that I don’t get in trouble please continue reading the article here: http://www.newyorker.com/online/blogs/frontal-cortex/2012/06/brain-experiments-why-we-dont-believe-science.html#ixzz1z5kOiuCU

Now, the question beckons, what does it mean for the quality of your trading analysis and decisions?