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Financial Risk Taking An Introduction to the Psychology of Trading and Behavioral Finance
ISBN: 0470850264     Date Published: 2004-07-23     Author(s): Mike Elvin
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Hardcover
Wiley
294 Pages
 
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06/20/2013 01:32:01
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Editorial Review - Book Description:

In Financial Risk Taking, trader and psychologist Mike Elvin explores the complex relationship between human behaviour patterns and the markets, offering the reader a context in which to assess their own strengths and weaknesses as investors. The book offers an apposite and uncomplicated system of skills development in the form of competences and competencies that can be applied anywhere along the continuum from casual investor to full-time day trader. Elvin presents a Comprehensive Model of Trading Competence (the MOT) as well as the concepts of analysis and refutation, the paramouncy principle, and self-sabotaging behaviours such as the Santa Claus syndrome and Bohica effect.

Areas covered include:

  • Emotions - are they functional or disabling? How do the mechanisms of fear, greed and panic work?
  • Motivation and perception - how do belief paradigms affect perception and performance?
  • What perceptual errors influence decisions to the trader`s detriment?
  • Information processing and risk assessment - how does information overload affect Stress How does stress affect investment decisions?
  • Technological and mathematical anxiety - why do we avoid learning the skills we most need? What levels of ability are required?
  • Can psychological and biological theories assist in our understanding of investors` performance?



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"In Financial Risk Taking, trader and psychologist Mike Elvin explores the complex relationship between human behaviour patterns and the markets, offering the reader a context in which to assess their own strengths and weaknesses as investors. The book offers an apposite and uncomplicated system of skills development in the form of competences and competencies that can be applied anywhere along the continuum from casual investor to full-time day trader. Elvin presents a Comprehensive Model of Trading Competence (the MOT) as well as the concepts of analysis and refutation, the paramouncy principle, and self-sabotaging behaviours such as the Santa Claus syndrome and Bohica effect.

Areas covered include:

  • Emotions - are they functional or disabling? How do the mechanisms of fear, greed and panic work?
  • Motivation and perception - how do belief paradigms affect perception and performance?
  • What perceptual errors influence decisions to the trader`s detriment?
  • Information processing and risk assessment - how does information overload affect Stress How does stress affect investment decisions?
  • Technological and mathematical anxiety - why do we avoid learning the skills we most need? What levels of ability are required?
  • Can psychological and biological theories assist in our understanding of investors` performance?
 
Customer Review:
Total Reviews: (5)
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25 of 26 People found the following review helpful.

Another view, November 16, 2004 Bydbphoenix (Phoenix, AZ United States) - See all my reviews This review is from: Financial Risk Taking: An Introduction to the Psychology of Trading and Behavioural Finance (Wiley Trading) (Hardcover) Well, I don't know if "fascinating" is the word I'd choose for this book, though I'm not entirely sure that the word "book" is appropriate to describe it either. I'm sure Elvin is a very nice person and I applaud him for the journey he undertook to achieve trading competence, assuming that he ever did (achieve trading competence). However, this is not so much a book as a very long -- and I mean VERY long -- research paper. In effect, Elvin provides the glue to hold together not only the views of others but also sometimes lengthy passages from their books. Rather than contribute anything new to the literature, he provides what is called a "review of the literature", and that review is somewhat shallow. For example, the facility with which he assumes the value of certain elements, such as Fibonacci, even though there is no evidence that they have any demonstrable value at all, toots "new trader", giving the book a sort of What I Learned During My Summer Vacation After...
 
11 of 11 People found the following review helpful.

Trading and Emotional IQ, August 16, 2005 ByMark Mills (Glen Rose, TX USA) - See all my reviews This review is from: Financial Risk Taking: An Introduction to the Psychology of Trading and Behavioural Finance (Wiley Trading) (Hardcover) This is the first 'trading' book I've read that explicitly offers advice on suicide. Here is the final sentence of the last chapter, the one on depression and suicide: "...seek out a counselor, to find your way to God as you understand Him, or whatever it is that you need to do to end your pain, loneliness, and hopelessness. If you can manage this, and do something very small every day, I know you will get through your period of loss, and I will feel tremendously grateful for having shared some of your experience with you through this book." This is not a book on 'how to trade'. Loosely, the book is a psychologist's autobiographical 5 years in the trading pit (ok, in front of a trading screen). The first section covers Dr. Elvin's frustrations with finding a teacher and the second lightly touches on trading techniques. This is all rather flimsy material, but represents a fair picture of the pitfalls facing anyone trying to 'learn' trading by sitting in classes...
 
7 of 7 People found the following review helpful.

Get the book, read and apply it - worth the effort, February 16, 2005 ByRobert Heavill (Golden, CO USA) - See all my reviews This review is from: Financial Risk Taking: An Introduction to the Psychology of Trading and Behavioural Finance (Wiley Trading) (Hardcover) I don't normally write reviews, but I think that this is a great book. Serious traders should consider adding this to their library of reference material. I have a trading library that contains most of the classic trading books, including more than a dozen on trading psychology. The key is to find the "gems" in each one and figure out how to apply them in our own personal style of trading. This book is unique in three ways: 1. It pulls together some of the "gems" from the classics so the information is more accessible in one place. 2. The author lays down an excellent framework (structure) for being a successful trader - not just today, but a broad set of integrated skills the must be mastered & balanced. This is actually a interrelated set of "competencies" that the author outlines. 3. A "Model of Trading" is identified at a high level, and presented in a strategic and tactical flow chart. Some text supports the flow...
 
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