Behavioral Finance. N. Rudyk

Many beginning traders don't pay enough attention to the role of finance in stock trading. They tend to read only forex books and ignore financial works.

They make the mistake of relying solely on indicator signals, news feeds, or following previously identified patterns.

However, it is precisely knowledge of finance that helps achieve better results in long-term investing.

A PhD in finance isn't necessary; learning the basics and applying this knowledge to financial reporting is sufficient.

However, there are many pitfalls in this area; companies often deceive potential investors by misrepresenting their financial statements.

The book "Behavioral Finance" will help you learn to spot deception and avoid these pitfalls.

In addition, it perfectly describes how to perceive the available information.

Summary:

1. About what we should do, what we actually do, and what we should have done – how to properly conduct analysis and make forecasts based on the results obtained.
2. About optimists and their friends, who are usually only wise in hindsight – or how overestimating one's strengths can lead to disastrous results.
3. Trading can be dangerous to your health - the relationship between an investor's character and the profitability of his work.
4. How easy it is to become cursed – the main factors that shape the price of the offered asset.
5. On the harm of stereotypes – statistics and its influence on forecasting.
6. On desires and their consequences – how dangerous it is to mistake wishful thinking for reality when assessing the prospects of an asset.
7. About some abnormal reactions - are shares really that good if the company that issued them has a good reputation.
8. About what is promising, about what is not so much – we explore certainty, probability and possibility.
9. About timid managers – about how realistically corporate managers assess the degree of existing risk.
10. How and what some people get themselves into – projects that are easier to close than to continue spending money on them.
11. About one unhealthy predisposition – the influence of character and habits on a trader’s working style.
12. Practitioners, theorists, and one blind monkey – is there a connection between financial market theory and financial theory?.
13. On efficiency - the classical theory of an efficient stock market.
14. A few words about what Robert discovered – Robert Shiller’s research on market efficiency.
15. Noise - the theory of noise trading, irrational actions of investors, examples of the use of some theories.

Overall, the book is quite interesting, using vivid examples and unconventional approaches to assessing market conditions. At the same time, it is more suitable for a professional investor than a novice in stock trading.

Download Behavioral Finance