[zdo]

How would a chimpanzee (or monkey) trade?
Would s/he have the same biases as humans (patterns and tendencies like keeping losers and cutting winners, etc)?

Maybe this has been asked and answered elsewhere - don't know...
would love to hear from any resident behavioral psychs

[Eiger]

That's an interesting question, Zdo. A major difference between humans and animals, including monkeys, is in the symbolic use of language. Cutting-edge psychology is now learning that our mind's analytical properties (e.g., the ability to compare and contrast, evaluate, plan, etc) is great for building things like the information superhighway, rocket ships, smart bombs, fuel effiecent cars, and better mouse traps. Argueably, most things that the human mind applies itself to "outside of the skin," so to speak, has advanced the species. When we start applying the same mental abilities to ourselves, however, things can break down.

It is easy to imagine that if we we locked in a room, we could use our mental powers to find the solution to get ourselves out. We could, for example, open a window and jump out. Too, far to jump? Then call our mate on the cell phone. Battery dead? Then we could shout out the window at passersby for assistance, etc, ect, ect. The mind has no problem coming up with possibile solutions. It's very, very good at that. Perhaps too good.

When, for example, we compare ourselves with others and find ourselves coming up short (e.g,, not as pretty, not as good a trader, more fat than, have less hair than, etc) and feel bad, or we think about the last losing trade we had and project that into the future for the next trade and hestitate on pulling the trigger, our mind is actually working against us. Even though it feels true and right, we aren't always well-served by what our mind is telling us. Have you ever had this experience: You get in a long trade and it shows a little profit. Your mind says, "Hey, take the profit. Don't be a smuck and give it all back, just take your profit now." So you listen to what your mind says and you exit. Price continues to rally and makes new highs. And, what is your mind saying to you now? "Why didn't you stay in that trade? It was a perfectly good trade! Look at all the money you left on the table!" etc, etc. So here's the question: which was the truth? Unfortunately, traders stuck in the loss aversion/disposition effect and cut winners short see both as true.

As good as our mind is in problem-solving and other analytical activities, when applied to ourselves it often causes suffering and results in not only inappropriate behaviors, but in a restriction of our behavioral repertoire -- we limit our responses and options. This has enormous implications.

The minds of monkeys and other animals don't work this way, mainly because they don't use language. Think about this for a moment: how many animals have you known or heard of that committed suicide? I'll wager not one. But in the human realm there are many. We are now thinking that the act of suicide is the mind turned against itself in a problem-solving way in extremis.

Behavioral psychologists have studied animal behavior and learned many useful things. For example, teach an animal to press a level to recieve food, and it will quickly learn the task. Stop giving food when the lever is pressed and the animal quickly figures out the effort no longer produces results and so it stops pressing the level. Humans will do the same in similar rewarded tasks. Here's where there is a difference: Teach the animal to press the lever and every so often give it the reward of food. Like before, it learns and will do the task. Stop giving the food and the animal quickly figures out it is no longer being rewarded and it soon stops the task. Humans take much, much longer to stop.

It's called an intermittent schedule of reinforcement. Casinos know this and program the slots to "reward" players on such a schedule. They know that when reinforced just a little, people will continue to play and play and play. It's great for the casino; not so good for the player. Likely, the culprit is the mind telling the player, "Hey, XX losses in a row, you're due for a hit" or some such nonsense. And, by the way, this is the real reason animals are not allowed to gamble

This is the main difficulty with traders moving their stop and giving the trade "just a little more room." When it worked out a time or two earlier, the trader was reinforced for a poor trading behavior. The behavior avoided the pain of loss and gave an immediate gratification. So even though the trader knows it is a bad move, it will take him or her a long time and many losses to correct that behavior because of that highly reinforcing experience. If the trader is honest and candid, he or she will tell you that they discounted a basic axiom of trading because they thought (i.e., their mind was telling them) that it would be better to move their stop to avoid the loss.

Animals certainly respond to punishment and aversive consequences. If, for example, they were given a shock every time their trade was a loser, they wouldn't be trading long unless the shock was relatively mild and the rewards for the win were a lot larger than the pain. They don't relate to money, and I can't remember if there have been animal studies that were able to produce effective reinforcement with non-natural reinforcers (money is a non-natural reinforcer; food is a natural reinforcer).

I think you could probably teach a monkey to trade a couple of basic setups. As long as you reward it with something it likes every time there is a win, you would probably have a good trading machine. Because it doesn't use language like we do and, therefore, it doesn't evaluate itself as a loser in the context of a loss, it wouldn't get flustered at the losses or begin restricting or altering it's behavior. It would just wait for the next set up and be looking for that next banana.

So, let me know if you have a monkey you want to train ...

Eiger

[walterw]

We Chimps have a high IQ, thats why we make money everyday... cheers The Holy Chimp .

[zdo]

... slightly related ....

Michael Merzenich on re-wiring the brain | Video on TED.com

[evolved trader]

Interesting question ZDO.

Thanks for sharing the TED video. Great information.

Ryan

[zdo]

So, let me know if you have a monkey you want to train ...

Eiger

One or two of the monkeys by nature and/or conditioning became focused on results and the implications of those results. By all indications, they are healthy, motivated monkeys, but are caught in a ‘do to have’ mentality trap when a ‘do to do’ orientation would be more adaptive. With the subjective implications of their results further complicating things, these monkeys are also in conflict about the wealth gained from a seemingly disproportionately small amount of work effort. Their trainers understand the importance of focus on process during deliberate practice, but with these monkeys the background threads of results and conflicts about those results hamper the monkeys’ trading at least 2-3 days a week. All the other monkeys appear to be able to strictly focus on process and be free of conflicts about ‘serendipitous’ affluence. The trainers have tried rational reasoning with these monkeys. The monkeys looked sincerely into their eyes and nodded Yes – but nothing changed. What are all the factors at work here? What can be done?