Fundamental Analysis in Trading: Pros & Cons

Fundamental Analysis in Trading: Pros & Cons

What is fundamental analysis in trading? Is it possible to predict the market based solely on what fundamental analysis says? Fundamental analysis predicts what the market will do based solely on what mathematical models say is logical. However, traders’ behavior is far from logical, which is why fundamental analysis alone is not enough to predict what happens in the market. Here’s why you can’t predict the market based on fundamental analysis alone.

Stephen Hawking: Aliens Are Probably Out There

Stephen Hawking: Aliens Are Probably Out There

What did Stephen Hawking say about aliens in his book Brief Answers to the Big Questions? Did Hawking believe in the existence of extraterrestrials? According to famed theoretical physicist Stephen Hawking, aliens most likely exist, but there’s a good chance humanity will never encounter them. This is because Hawking believed that extraterrestrial life is likely unintelligent and lacks the technology to communicate with others. Here’s an in-depth look at Stephen Hawking’s theories about aliens.

Debates Over the Ten-Thousand-Hour Rule

Debates Over the Ten-Thousand-Hour Rule

What is the ten-thousand-hour rule? Who first came up with the rule, and what is the research behind it? The ten-thousand-hour rule basically says that you need to practice a skill for at least ten thousand hours before you can be considered an expert. After Malcolm Gladwell published these findings in his book Outliers, there have been a number of criticisms. Here’s why the ten-thousand-hour rule doesn’t hold up.

The Neglect of Probability Bias in Decision-Making

The Neglect of Probability Bias in Decision-Making

What is the neglect of probability bias? Do you consider the probabilities of possible outcomes when making decisions? Neglect of probability bias is the tendency to disregard probability or risk when making decisions in the face of uncertainty. The most optimal choice is the one that has the highest probability of turning out well, but people tend to opt for the option that will have the biggest positive impact if it occurs, regardless of how likely it is. Here’s why we tend to neglect probability when making decisions.

Sampling Distribution: Explained in Simple Terms

The Millionaire Next Door Formula for Net Worth

What is sampling distribution? What are some of the pitfalls in working with mathematical averages in math? A sampling distribution is one of the complex math concepts many people don’t instinctively understand. The sampling distribution (or the distribution of the average) is important because averages are misleading: Your brain focuses on the average and doesn’t consider possible outliers in the distribution. Keep reading to understand sampling distribution, explained in simple terms.

The Dangers of the Sample Selection Bias

The Dangers of the Sample Selection Bias

What is self-selection bias? How does self-selection bias influence research findings? Sample selection bias is a common issue in psychological studies that involve statistical analysis. Specifically, people only join studies they’re comfortable responding to, which alters your data. Those who might provide embarrassing or somehow “undesirable” responses simply won’t take part, narrowing your study’s scope and skewing the results.  Here’s how sample selection bias skews research results and how to work around it.

False Causality: Correlation Doesn’t Equal Causation

False Causality: Correlation Doesn’t Equal Causation

What is false causality? Why do we assume causality where there is none? Humans struggle to interpret cause and effect because they confuse correlation with causation, assuming causality where there is none. For example, if a person gets the flu after they start taking vitamins, they might assume a causal relationship—taking vitamins gave them the flu—simply because the timing coincides. Let’s consider some ways the assumption of causality (where there’s none) impairs logic.

Coincidence and the Law of Very Large Numbers

Coincidence and the Law of Very Large Numbers

What is the law of very large numbers? How does the law of very large numbers help explain coincidences? The law of very large numbers is one of the key concepts in probability and statistics. The concept is quite simple: with a sample that’s large enough, even the most improbable events could happen. Keep reading to learn about the law of very large numbers and how it explains coincidences and improbable events.

The 37% Rule: How to Know When to Settle

The 37% Rule: How to Know When to Settle

What is the 37% rule? How can employing the 37% rule help you make better decisions? The 37% rule is designed to solve something mathematicians call an “optimal stopping problem”—something we often encounter in daily life when faced with a series of options. The 37% can help you settle down and commit to the opportunity in front of you if you don’t know what opportunities will be available in the future. Here is how the 37% rule settle on a decision and signal when to stop searching for something better.