Mon 5 Feb 2007
People Almost Never Behave Rationally
Posted by Ed Mamula under Economics 101 , Forex Trading Results , NarrativesIn Economics 101, we’re presented with the simplifying assumption that people behave rationally. This assumption, along with other equally unrealistic assumptions such as perfect information, allow us to build cute models to explain the behavior of markets. As if there were any need for more proof that people do NOT behave rationally, I offer this: My automated Forex system, the Cable Glider, placed a trade in the last 24 hours that netted me a gain of $1,860. This put the system at a 6.2% positive return for February, and put me at a new all time equity high. This makes me happy.
The Carnival of Investing - Super Bowl Edition was published today and included a link to EdMamula.com…this link drove some traffic to this my site and resulted in $1.26 worth of ad revenue. That made me HAPPIER. I’m sure we all have experienced similar things. It’s a bit like driving that extra mile to save 2 cents per gallon on gasoline. Of course, ask anyone who has taken Economics 101, and they will tell you that yesterday’s winning trade should make me 1476 clicks happy…somehow, the emotional mathematics just don’t work that way. AND, for fun, I’ll go ahead and donate that $1.26 to the Hunger Task Force…let the economists figure THAT one out.
