Traders’ Tips: Anticipate Your Regret
- By Matthew Tibble
- 5 min read
Summary
- Research shows our emotions are as influential as our rational analysis when deciding on an investment.
- Emotions can both enhance and impair judgement, so understanding and categorising them is key to measuring conviction in an investment.
- The Achilles’ heel of many investors is anticipated regret – control it and you will leap one step ahead.
Trading Under Uncertainty
How do you choose between Stock A and Stock B? Rational choice theory argues we make cold calculations based on the information available to maximise advantage and minimise loss. And in complex cases involving uncertain outcomes, you try to maximise your expected utility: you weigh the risk and reward against your risk appetite and preferences, then decide how to act.
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