Forex education
This is an interesting article from Steve Keen (Keen is Associate Professor of Economics & Finance at the University of Western Sydney), discussing how:
when an issue is politically neutral, a higher level of numeracy does correlate with a higher capacity to interpret numerical data correctly. But when an issue is politically charged – or the numerical data challenges a numerate person’s sense of self – numeracy actually works against understanding the issue. The reason appears to be that numerate people employed their numeracy skills to evade the evidence, rather than to consider it.
The article is in and of itself interesting, but I think it is especially of interest to traders.
It highlights a pitfall to, at the very least, be aware of:
“when … numerical data challenges a numerate person’s sense of self – numeracy actually works against understanding the issue”.
For me, this means, when a ‘bear’ sees evidence conflicting with his ‘sense of self’ (i.e his bearish view) he is in danger of evading the evidence, instead of considering it. And, of course, the same applies to bulls.
If this applies to you, what's it costing you?
Bulls don't see the evidence for what it is. Nor do bears. Cats too, so it seems.
When economic theory fails the maths exam
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I should add a ps. to this article, as it is (tangentially) relevant. I have been (and remain as of writing) a critic of Professor Keen. He has (in brief) been calling an Australian house price collapse for going on a decade, and he has been wrong. But that's not to say he cannot make valid points, as he has done in this piece.
