One approach is you can go around until you find a helpful sign. Let's say you took faster approach and simply looked at the books on the shelf next to you. You see:
Book 1: Piers Anthony’s Blue Adept: The Apprentice Adept
Book 2: J. K. Rowling’s Harry Potter
Book 3: J. R. R. Tolkien’s The Hobbit
You’re not sure how to categorize Book 1, so it’s not good evidence for either Science Fiction or Fantasy. Books 2 and 3, however, have wizards or elves on their covers, and you might firmly classify them as Fantasy. By now, you’ve weighed the evidence and concluded you’re in the Fantasy section.
Here’s where it gets interesting. If someone had simply handed all three books to you at the same time, you might feel that it’s somewhat likely you are in the Fantasy section. But if someone handed the books to you one at a time, you might conclude very strongly that you’re in the Fantasy section. Even though the books are the same, you would weigh the strength of the evidence more heavily when you processed them in turn, rather than all at once.
Book 3: J. R. R. Tolkien’s The Hobbit
You’re not sure how to categorize Book 1, so it’s not good evidence for either Science Fiction or Fantasy. Books 2 and 3, however, have wizards or elves on their covers, and you might firmly classify them as Fantasy. By now, you’ve weighed the evidence and concluded you’re in the Fantasy section.
Here’s where it gets interesting. If someone had simply handed all three books to you at the same time, you might feel that it’s somewhat likely you are in the Fantasy section. But if someone handed the books to you one at a time, you might conclude very strongly that you’re in the Fantasy section. Even though the books are the same, you would weigh the strength of the evidence more heavily when you processed them in turn, rather than all at once.
A trader sees all evidence at once on left side of the chart. Whereas on right side of the chart, the trader gets evidence one at a time from market. Add to that mix our natural ability to selectively see/emphasize what we want to see. Best antidote? I don't know. I would imagine probably it would be a trading plan that was proven on data that has all evidence at once and a discipline to follow that. Thoughts?
ScientificAmerican article is available here.
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