You are what you read: try an information diet

news-1729539_960_720A developing trader said something to me a few weeks ago that has stuck in my mind: he said that he has to be careful what websites he reads because negativity can be dangerous; when you live in a constant state of fear, it colors everything you see. Be careful: you are what you eat (and read and think about!)

I think it goes even deeper. Negativity and fear change our perception deeply. When we absorb certain kinds of information, or information placed in emotional contexts, we create blind spots for ourselves. We are not able to see and think rationally if we allow too much emotion, and too much emotional contamination from others, into our thought process. Emotional context changes how think and how we are able to think.

I’d challenge you to take a moment and think about the information you consume on a daily basis. First, major media is not perfectly unbiased. Anyone who works in media wants to engage an audience. We (I’m including myself here because, among other things, I’m a blogger) all know that emotion generates clicks, shares, and reads and negative emotion resonates much more strongly than positive. So, news stories naturally come wrapped in an emotional wrapper with a provocative and emotional headline, and our brains naturally accept the emotion with the facts.

Major media has a mandate to be more or less unbiased, and most major media sources accomplish this fairly well. But what about blogs and newsletters and sources that are intended to be biased? Some of the most popular sites on the internet feature an incredible dose of emotion—fear and hate will provoke and engage an audience and build a core audience very well.

So take a few moments today and do an information inventory. Ask yourself what sites and sources you regularly read and how much emotion is baked into them. (I’m not going to call out any specific sites or authors, but I think you will be able to read between the lines.) For traders, there are a few specific things to watch for:

  • Do you frequent discussion forums that are filled with frustrated, failed traders and investors? Some of these forums also include a healthy dose of constructive work by traders who are either committed to figuring out the game or helping others, but be sure you can separate out the wheat from the chaff. I’ve been involved in these forums since they were mailing lists, and I can say I’ve rarely seen the degree of anger that comes from failed traders. They are certain the system is rigged, and just throw abuse at anyone and everyone in the forum like a monkey throwing poop at the zoo. You can hang out in these forums, but watch out for the flying poop.
  • Speaking of flying poop, there’s been a lot of focus lately on fake news, especially politically-driven news on Facebook and other social media feeds. It takes less than a minute to do some basic fact checking, so please do this before you share and get upset about something you read.
  • Do you read newsletter writers who constantly predict the end of the financial world, World War 3, or who focus on conspiracy theories? If so, you’re probably hurting yourself. There are writers who have built multi-million dollar industries playing on the emotions of the public. These newsletter writers have been constantly predicting THE END for decades, and they’ve been wrong. They will continue to be wrong, but the harm they have done to their readers is almost beyond measure. If you read anyone like this, consider carefully what your world would be like without this influence.
  • Do you frequent blogs that repost or aggregate content like this? Is there a constant flood of posts predicting crashes, talking about why the system is rigged, or drawing great significance from hidden datapoints? Is everything blamed on HFTs? Again, this stuff generates clicks and shares, but it does not help you as a trader and investor.

Once you’ve taken a serious look at the information you consume, then you’re in a position to figure out what do to about it. I suggest trying an information diet: First, cut out virtually everything you read. If you are a news junkie, this may feel uncomfortable. You may feel blind or cut off, but give it a chance. Avoid clicking or reading for a week, and see how your emotional state changes.

Then you can start adding things back, a little at a time, and monitoring your emotional state while you do so. If you find yourself sucked into hours of clicking and sharing emotional and negative articles, first of all congratulate the blog owner on building an engaging blog, but then step away and rethink. You can absorb information, but you need to be careful about the emotion that goes with it.

AdamHGrimes

Adam Grimes has over two decades of experience in the industry as a trader, analyst and system developer. The author of a best-selling trading book, he has traded for his own account, for a top prop firm, and spent several years at the New York Mercantile Exchange. He focuses on the intersection of quantitative analysis and discretionary trading, and has a talent for teaching and helping traders find their own way in the market.

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