Behavioral Trading

Triunity Theory

Behavioral economics has been around almost as long as human behavior. Successful traders and investors have always known that there is more to trading and investing than the numbers indicate. However, a strain of rationalism hit the world in the eighteenth century and the contemporary science of economics evolved out of that tradition. Economists, therefore, assume as their starting point that people are rational economic actors seeking to do the things that best advance their self-interest. Thus, they carefully evaluate various possible outcomes and choose the one with the best economic result. The only problem with this way of thinking about people is that it runs directly contrary to much of human experience. People don’t behave rationally. There is nothing rational about greed, fear, lust and other powerful, proven motivations for human conduct. Think of market bubbles that send stock prices up far beyond any possible economic justification. Think of the nightly news. There’s plenty of evidence that people behave irrationally, but until the advent of the science of behavioral economics, economists tended to ignore this evidence.

The Greek philosopher...