Book 7: Sway: The Irresistible Pull of Irrational Behavior

Sway reminds us of the tendency to place higher value on opinions from people in positions of power, authority or someone more important. It shows that the hidden psychological forces influence our decision-making. I enjoyed this book very much, the way it explains the dynamic forces including : Loss aversion (the form of playing not to lose), Commitment (tendency to hold fast tour course of action), Value Attribution (attribute value to people or things based on quick impressions), Diagnosis Bias (inability to reconsider initial values once we have made them), Fairness Perception(acting against our best interests if we feel treated unfairly), Altruism – Pleasure conflict (performing better for altruistic motives than for rewards), Group Conformity (going along with the group even if it is wrong).

I would like to share a personal example on how people do not accept loss and so can not cut it on time. I was playing FOREX (Foreign Exchange) and at the beginning you put some “get profit” and “stop loss” limit points after making some analysis, so that you do not have to stay all day long in front of the pc, watching how the trend goes. Once I did not put any profit/loss limits, staying and watching the trend, wanting to stop it manually at the desired level. Firstly I was getting some profit and then the trend went down immediately, against me, it was continuously going down and I could not stop my loss but I was expecting it to change in my favor. It did not and I understood that after some point it was not going to change but even after that point, I could not stop it, still waiting to change in my favor. After losing too much and after I noticed that it was my biggest loss in my trading experience I stopped. Yes it was too late and this was my unforgettable “Irresistible pull of my irrational behavior”. I like the moral of this book, so to observe things for what they really are and do not forget this at any moment. So think twice before acting…