Psychology of Trading & Investing (Fooled by Randomness Summary)

Psychology of Trading & Investing (Fooled by Randomness Summary)
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This is a beginners guide to invest in shares (stock market) in India.
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In this video, we discuss the psychology of trading, investing and money from one of the best finance book - Fooled by Randomness. Nassim Nicholas Taleb's book, Fooled By Randomness explains how luck, uncertainty, probability, human error, risk, and decision-making work together to influence our actions, set against the backdrop of business and specifically, investing, to uncover how much bigger the role of chance in our lives is, than we usually make it out to be.

There are lot of important lessons in this book about trading psychology and investing psychology that we've discussed today:

We underestimate the share of randomness and luck. Especially in endeavors with high degrees of randomness and large sample sizes.
Consider alternative histories—what could have happened. One cannot judge a performance in any given field (war, politics, medicine, investments) by the results, but by the costs of the alternative.
Think in terms of expected value. Individual probabilities are meaningless without knowing the magnitude of their outcomes.
Life is nonlinear. Small acts can have disproportionate consequences (good or bad).
We are blind to probabilities. We do not make rational choices, but emotional ones.