NeuroInvesting. Build a New Investing Brain

  • ID: 2500243
  • Book
  • 240 Pages
  • John Wiley and Sons Ltd
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Praise for NeuroInvesting

"NeuroInvesting boldly breaks new and critically important ground in the fields of investor psychology and strategy. By combining cutting–edge neuroscience with a deep understanding of the mind of the investor, Wai–Yee Chen insightfully probes the nuances of how to effectively create winning portfolios. NeuroInvesting represents a major advance in practical investment psychology and strategic decision–making, as well as significantly developing the application of neuroscience to enhanced self–control and awareness. Reading and reflecting upon this work of Wai–Yee Chen will significantly enhance any investor′s ability to trade with confidence, intelligence, and perhaps most importantly, wisdom."
Jeffrey M. Schwartz, MD, Research Psychiatrist University of California, Los Angeles author of You Are Not Your Brain and The Mind & The Brain

"NeuroInvesting presents some interesting ideas that most traders and investors will not have considered. You can take a test to determine your dominant personality traits and then learn 1) where your weaknesses are as an investor and 2) how your brain contributes to those tendencies. Plus, the book is full of interesting ideas such as ′avoid a big meal of steak and wine during a bear market.′ If you want to step outside of the box and explore how your brain works, then you will probably enjoy this book."
Van Tharp, PhD, author of Trading Beyond the Matrix

"This thought–provoking and adroit book provides a masterful synthesis of many fields of research. Wai–Yee Chen cogently weaves together relevant areas of neuroscience, psychology, and investing to provide an illuminating analysis of investment related to the economy. A great read!"
John B. Arden, PhD, author of Rewire Your Brain: Think Your Way to a Better Life

"This is a remarkable book. Wai–Yee Chen shows how neuroscience promises further to advance our knowledge of financial markets by identifying the neural processes that motivate investors′ decisions. In particular, the book examines the brain′s role in minimising threat and increasing reward. The result is a very enjoyable and easy–to–read insight into how the behaviour of large groups of consumers or investors can and does impact financial markets. This book should be required reading, not only for those involved in financial investment, but also for all those who have to make business decisions."
Colin Wallace, PhD The Center for Applied Neuroscience

"It is hard to overcome your psychological biases . . . so don′t! Use them to your benefit. NeuroInvesting shows you how to understand your own personality traits and then invest with a style that is consistent. Brilliant!"
John Nofsinger, PhD author of The Psychology of Investing

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Foreword ix

Preface xi

Acknowledgments xv

About the Author xvii

Part I Being at Ease 1

Chapter 1 Money and Me 3

My Money Personality 4

The Big Five Personality Traits 13

Money and Me 16

Notes 17

Part II The Tension Caused by Impulsiveness 19

Chapter 2 Thrills, Ego, and Impulse: Is It Bad? Is It Me? 21

What Is Impulsiveness? 21

What about Impulse? 26

Keeping Impulse and Impulsiveness at Tension 34

The Impulse Meter 36

Notes 37

Chapter 3 Impulsiveness and Our Brain: Dopamine and the Reward Network 39

Impulsiveness and Dopamine 39

Dopamine Neurons 40

Dopamine and the Trader 41

Dopamine Withdrawal Symptoms 42

Novelty–Seeking Gene? 44

Dopamine s Engine Room and Neuronetwork 45

Notes 49

Chapter 4 Beating Impulsiveness 51

Taut and Alert 51

The Effect of Serotonin 52

The Right Brain Comes to the Rescue 55

Engaging the Rational Brain 57

Setting Rules and Sticking to Them 60

Emotional Pain and Fear 63

In Conflict 66

Brain Loop 67

Be Open 69

Play Your Own Game 71

Notes 71

Part III The Tension of Fear73

Chapter 5 How Did Fear Get Here? Expectations, Letdowns, and Anxiety 75

A Big Expectation 75

A Clean Slate? 77

Prevalent Fears 78

Personal Fears 88

Notes 99

Chapter 6 Are Fears Bad? Fear Takes the Role You Give It 101

Passing Up Good, Profitable Opportunities 101

Buying at the Top 102

Buying Products with High Yields 103

Counterproductive Trading 105

Unnecessary Protections 106

Fear Incapacitates 107

Inability to Accept Losses 110

Fear Causes Brain Freeze 111

The Costs of Fear 112

Notes 113

Chapter 7 Reacquaint Yourself with Fear: Been Burnt, Done That 115

The Pandora s Box of Fear 115

The Engine Room of Fear 116

The Process of Fear 118

The Making of Fear Memories 118

How Real Are Memories? 119

Recreating Trading Memories 122

Other Fear Management Techniques 126

Notes 131

Part IV Instincts Held in Tension 133

Chapter 8 Emotions and Beliefs: Who Is in Control? What Is Real? 135

Emotions 135

What Are Emotions? 136

The Emotional Neuronetwork 137

Value of Emotions 138

Emotional Expression of Goals 141

Our Beliefs: The Unspoken Goal 144

Instinct Encapsulates All 148

Notes 149

Chapter 9 Expressions of Instincts: Are Your Instincts Undervalued? 151

A Culture of Anti–Instinct 151

Your Instinct Awaits 153

Expressing Instincts 154

The Emotional Brain and Instincts 155

Instincts in Trading 156

From Instincts to Mimicry 158

Mirror Neurons in Trading 160

The Workings of Mirror Neurons 161

Practice Instincts 162

Avoid Instinct Killers 162

Avoiding Anti–Instincts 173

Notes 174

Chapter 10 Nurturing Your Skills in NeuroInvesting: What Is Your Mental Personality? 177

How to Be an Excellent Instinctual Investor 177

NeuroInvesting Is a Journey 186

Notes 187

Chapter 11 Summary of the 12 NeuroInvesting Trading Strategies 189

Appendix A Big Five Inventory Questionnaire (Adapted) 191

Appendix B Barratt Impulsiveness Scale (Revised) 197

Appendix C T he Maudsley Medical Questionnaire 201

Appendix D Word Connection List 203

Appendix E Body Perception Questionnaire 205

Index 213

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Wai–Yee Chen
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