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The progress of society is often marked by sudden and unexpected leaps, as seen in the example of two bicycle repairmen inventing airplanes. This kind of surprise is not uncommon. Before the 20th century, viruses were a medical mystery because they were too small to be seen under an optical microscope. As a result, people came up with creative explanations for the spread of disease, such as blaming it on gas or poor living conditions, or even the curse of the devil or the wrath of God. However, a breakthrough came in the 1890s when a Russian scientist named Dmitry Ivanovsky discovered the cause of tobacco leaf disease to be a substance smaller than bacteria, which we now know as a virus. This discovery opened the door for research into infectious diseases in the medical field, leading to breakthroughs in epidemiology and related disciplines.
Similarly, the financial investment industry also relies on feedback from auxiliary disciplines to determine its future direction. "Mastery transcends technique" means that to achieve breakthroughs, we must not rely solely on traditional financial research methods, such as supply and demand curves and duration analysis, but also keep up with the continuous development of modern neuroeconomics and behavioral finance. The trend of progress has always been to push forward and then start over. As a part of nature, we must adapt to these rules of the game.
In the previous chapter, we discussed the significance of self-awareness in trading. In this chapter, we will delve into how to comprehend ourselves and the link between self-awareness and prosperous trading. As humans, our conduct reflects the stimuli we receive from our environment, and our brains function as information processors. If we sever the connection between our brains and information, we will not initiate any new actions. Therefore, it is critical to comprehend the essence of human behavior. Now, let's examine what information is. We can categorize information into two types: external and internal. External information comprises the information we perceive through our senses from the external environment, such as feeling pain when punched or seeing something captivating. On the other hand, internal information pertains to changes that take place within our organs or hormonal levels, which our brain can sense. For instance, when we feel hungry, our brain detects this sensation and guides us to find food. During adolescence, hormonal changes can lead to a desire for romantic relationships. After comprehending the idea of information, we may ponder over how our brain processes it. Since the brain's purpose is to process information, it must have a specific pattern for processing it. We can broadly classify this pattern into two modules: filtering and processing. The filtering module sifts out unnecessary information, while the processing module analyzes and matches the incoming information with the information stored in our memory. Though this classification is not academically rigorous, it suffices for laypeople to understand.
Let's start by examining the first module - filtering. The human body's sensory organs consist mainly of the eyes, ears, mouth, nose, and skin. As we mentioned earlier, these five sensory organs receive information almost continuously, 24/7. For instance, if someone suddenly punches you, your skin will receive the information of pain. But if that person punches you while laughing, not only will your skin receive information, but your eyes will also receive the information of the person's facial expression (laughing). Both of these pieces of information will enter your brain simultaneously for processing, and your brain may perceive that the person hit you "good-naturedly," so you don't need to "fight or flee." However, at that moment, your eyes would have seen more than just the person's expression. You would have also seen the distribution of light and shadows at the time, and perhaps even a thin spider silk on their hair. But these pieces of information were defined by the brain as "irrelevant" to the scene at the time and filtered out. It's a bit like someone telling you not to buy stocks when the Chinese stock index was at 6000 points. At that time, you were in a state of panic buying, and your brain filtered out information like "don't buy stocks" that did not fit the scene.
The brain's filtering of information is essentially done subconsciously, and unless you undergo special training, you cannot control what information you filter out. Scientists have shown through research that we receive 11 million bits of information per second from our sensory organs,/>/>/>/>