On attention, trading psychology and “open” minds

Dr. Brett N. Steen­barg­er, author of The Psy­chol­o­gy of Trad­ing and numer­ous arti­cles on trad­ing psy­chol­o­gy , has post­ed a fas­ci­nat­ing arti­cle titled Approach­ing Trad­ing With an Emp­ty Mind, where he describes the risks of becom­ing “pris­on­ers of the men­tal maps we cre­ate”, and miss­ing new pat­terns and real­i­ties, there­by pre­vent­ing us from adapt­ing, and suc­ceed­ing, to new circumstances.

He quotes a book by Deep Sur­vival: Who Lives, Who Dies, and Why, in which Gon­za­lez “has pro­vid­ed a con­cise for­mu­la for trad­ing suc­cess: bold­ness and humil­i­ty. The exem­plary trad­er has the bold­ness to act with con­vic­tion, and the humil­i­ty to real­ize that what is appar­ent may not be all that is there.”

Does this sound very abstract? Well, why don’t you try this lit­tle exper­i­ment, con­ceived by Simons and Chabris for their clas­sic study on sus­tained inat­ten­tion­al blind­ness (1999).

You will watch a brief video clip, and your chal­lenge is to count the total num­ber of times that the bas­ket­balls change hands.

Click here to view the Bas­ket­ball Exper­i­ment clip (To view it, you will need to have Java active in your brows­er. The video is fair­ly large, 7.5MB, and it might take a while to fin­ish loading.)

You can read about the fas­ci­nat­ing results here.

Why this is impor­tant for traders 

Dr. Steen­barg­er warns traders “not to miss the goril­las in the mar­ket”, by keep­ing a hum­ble and open mind, ready to pay atten­tion to new and to learn.

In his book, Lau­rence Gon­za­lez sug­gests that the prac­tice of Zen med­i­ta­tion may help train this men­tal atti­tude. Arti­cles like this are exam­ples of the grow­ing impor­tance of the field of behav­ioral finance and neu­ro­fi­nance, which are becom­ing fer­tile ground for train­ing ideas that improve trad­ing performance.

Why this is impor­tant for everyone

I have been giv­ing a num­ber of lec­tures on “New Brain Research and its Impli­ca­tions for Our Lives”, com­bin­ing research find­ings with fun activ­i­ties and exper­i­ments-such as the “Did you miss the Goril­la” above. Par­tic­i­pants are usu­al­ly shocked first by the proof that our brains are far from being as per­fect as we usu­al­ly believe they are…and then a tremen­dous col­lec­tive laugh­ter follows.

The point is: some times we need to nar­row our focus in order to com­plete very demand­ing tasks, some times we need to keep an open mind, emp­ty of con­stant men­tal chat­ter, in order not to miss the big pic­ture. Prac­tices like Zen, yoga, med­i­ta­tion in gen­er­al, or, for the visu­al-and-tech­nol­o­gy ori­ent­ed among us, biofeed­back devices, may help to train this “keep­ing an open mind” mus­cle part of Brain Fit­ness.


  1. Chris Wu on September 10, 2006 at 2:19

    This is a both a prac­ti­cal and deep top­ic. The roots of behav­ioral finance come out of much of the work done on cre­ativ­i­ty and mind­ful­ness. See peo­ple such as Frank Barron/Torrance/Rogers. Philo­soph­i­cal­ly these can be con­nect­ed to phe­nom­e­no­log­i­cal per­spec­tives such as Mer­leau-Pon­ty & Hei­deg­gar (par­tic­u­lary how embod­ied cog­ni­tion is not the Cartesian/Platonic ideal.

    Daniel McFad­den’s work (which got him his Nobel) has a nice paper on “Ratio­nal­i­ty for Econ­o­mists” where he cri­tiques the ratio­nal­i­ty of the “Chica­go” man.

    Alvaro — a sharp site for sharp­brains =) (Note I did­n’t include my reg­u­lar email address because of crawler con­cerns — You might want to allow peo­ple to put in emails such as myname_at_gmail.com)

  2. Michael Krot on September 10, 2006 at 2:48

    I was in a group of 10 peo­ple the first time I count­ed the bas­ket­balls and we com­plete­ly missed the “big­ger pic­ture”. That was two years ago. This time, I was able to track the balls and get up on the bal­cony and notice what else was going on. Per­haps evi­dence of a sharp­er brain. My expe­ri­ence between the first time and this time makes me curi­ous about how oth­er brain work­outs might help with my perception.

  3. Alvaro on September 12, 2006 at 10:13

    Chris, thanks for the lead, and the feed­back on email address­es. The Daniel McFadden’s book sounds very inter­est­ing, start­ing with the title! What are its main conclusions?

    Michael: well, the sec­ond time you know what you are look­ing for, and were pay­ing atten­tion to both the balls and the goril­la. In most cir­cum­stances, it would not be the most effi­cient thing to divide atten­tion, but we can do it when we want. And yes, there are some good com­put­er-based pack­ages to improve task-spe­cif­ic per­cep­tion areas in an struc­tured way, like periph­er­al vision for air pilots and bas­ket­ball players.

About SharpBrains

SHARPBRAINS is an independent think-tank and consulting firm providing services at the frontier of applied neuroscience, health, leadership and innovation.
SHARPBRAINS es un think-tank y consultoría independiente proporcionando servicios para la neurociencia aplicada, salud, liderazgo e innovación.

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