The Lemming Effect (Part 3)

The Lemming Effect dovetails nicely with my previous posts on discretionary trading.

The “lemmings” are, after all, getting information about a discretionary trade from the trading log whether they realize it or not. Other thoughts from the trading landscape now come to mind:

• 80-95% of all traders end up failing in their first few years.
• Many popular/outspoken traders disappear over time.
• Discretionary trading has much don’t-know-what-you-don’t-know risk.
• I rarely encounter traders well-versed in system development.

Like a detective trying to make sense of a case, I am now starting to discern a positive feedback failure loop or a vicious cycle possibly taking place with discretionary trading playing an integral role.

As an aside, asking the trader why he initially volunteered to share the trading log might prove to be interesting. Is he selling something? In some cases I suspect ulterior motives. Here, my guess would be that he just wanted to “give back” by contributing to the group. Whether he is actually helping or not is another discussion entirely.

I struggled to categorize the posts in this mini-series. “Financial Literacy” makes sense because I feel it’s good information for developing traders and consumers of the financial industry to understand. “optionScam.com” makes sense because I believe the points about credibility and authority are inoculation against potential fraudsters. I chose “Trader Ego” because I believe this along with greed are what make us susceptible to barking down the wrong path.