By Andy Jordan on Monday, 28 March 2016
Category: Trading General

The more I know, the less I know, and the more I become confused.

People have the tendency to believe that the accuracy of forecasting the markets increases with more information. This is the illusion of knowledge – that more information increases your knowledge about something and improves your decisions. However, this is not always the case – increased levels of information do not necessarily lead to greater knowledge. There are three reasons for this. First, some information does not help us make predictions and can even mislead us. Second, many people may not have the training, experience, or skills to interpret the information. And, finally, people tend to interpret new information as confirmation of their prior beliefs.

For my own trading, a simple trading approach has always preference over a more complicated approach. More information (using too many indicators at the same time for example) has never increased my performance. Very often the opposite was the case and I quickly turned back to what I have done in the first place - following a handful of simple trading rules trying to manage my trades the best way I can.

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