Unveiling The Truth Behind Stock Trading: Avoiding Survivorship Bias

When it comes to the stock market, Survivorship Bias is always present, and it leads to misinformation resulting in false expectation.

When a stock trader or investor tries to make money from the stock market they often look at the best performers or the companies which have grown the most, whilst they don't consider the many many companies that are no longer in existence and often excluded from the data.

Using such analysis can lead to a disappointing outcome.

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[FinancialWisdom]

Stockopedia 25% Discount - bit.ly/2YIcAIn

[christinawtjn]

Hit 200k today. Thank you for all the knowledge and nuggets you had thrown my way over the last months. Started with 17k in last month 2024.

[charleshacker]

Your channel always stands apart as different. It's not at all about "Im so smart, just follow me." You really teach us to cope with real strategies. Thank you so much.

[Markscott]

The stock market is risky But staying on the sidelines is riskier. Missing the next bull run will be far more costly to your long-term wealth than getting in at the "right price". Speaking from experience, I've grown my portfolio to £310k.

[MasiTrades]

I will be forever grateful to you, you changed my whole life and I will continue to preach on your behalf for the whole world to hear you saved me from huge financial debt with just a small investment, thank you Catherine Gauthier.

[Number_]

This is why I dont read biographies except to see where they went wrong. Very few of those. Like Cesar, people dont publish there failures only there successes.

[potatowhisperer]

You deserve more views ❤ one of the few honest YouTube channels offering realistic market guidance for noobs. I’m very grateful for your work. Thank you ❤

[jean-marcducommun]

These contributions are like a medicine: You need to take it regularly and for a long time if you like to cure your misbehaviours as a trader. I have 30+ years of investing and trading behind me but I'm always watching with great interest. Thank you!

[Richardcarlett]

Buying silver and gold is easy, but it is renowned for stability during economic hard times like this. The main problem is investing in stocks, dividends and even cryptocurrencies to grow your portfolio.... I’ve been trying to grow my portfolio of $190K for some time now, my major challenge is not knowing the best entry and exit strategies ... I would greatly appreciate any suggestions

[GREGG-]

Market highs can sometimes be followed by corrections, but predicting the timing and extent of it is challenging. I've heard some analysts talk about a 'massive' correction. It makes me wonder if it's time to adjust my $2M portfolios or maybe even consider some defensive investments.

[donaldreitsma]

I am a member after following these videos for some time and it has really paid off! Thanks.

[cagrikanik]

Hi FW, Very good video again. Especially USIC examples are very important. If you can make 8x per year in such years you can be richiest people in the world. This is not sustainable. Traders should be very careful about the survivorship bias.

[MilhouseBS]

1:18 early example of Operations Research

[mulemule]

*Another nuanced but exceedingly relevant topic explored. Also, is there a video on WHY the 20 Week Moving Average is such an effective indicator?*

[Christoffel-fl]

I really love your videos. As a new trader your videos are golden.
Mostly focusing on management of the phsycological warfare in your mind between 2 very strong emotions.

[alphabeta]

2:00 Probability of picking Google
3:00 2023 USIC
5:00 Newbies and FOMO
6:55 20 week MA for selling
8:55 Don’t listen to clowns on TV
10:00 Psychology

[StateoftheMatrix]

Trading and investing is a microcosm of general psychological phenomena, which get elevated due to risk. The Survivorship bias is a serious problem everywhere and distorts all the information stream and our views of success generally. Think of the crisp models of success that peeps carry around in their pockets, which are based on following the successful and ignoring failures/losers because they're just losers and of course you're supposed to listen to winners. You need to assess the scene and respect informants in the game no matter their status, particularly the failures because you want to know why and how they failed.

[hydrostaticg]

My last two trades I jumped in on high volatility and positive news, up $600 on one, and $90 on the other in minutes. I should have taken the money and run, but my hope for a massive gain caused me to stay in the trades even in decline with no stop loss hoping for a rebound. Then, I was in just to recover. And then, I was out of each trade in despair. 1st trade -$500, second -$333, all as a result of my own personal greed. The 2nd could have been avoided by learning my lesson on the 1st, which apparently I did not. The T-2 played a huge psychological role in me wanting to hold out for a larger gain as I would have to wait to trade again with my small account. Learning as I go. Thank you for this video!

[williamkz]

Thanks Gareth. Absolutely brilliant. Loved the illustration of the returning war planes. I now use your 10 week / 20 week EMA crossover as an exit point for ETFs. With regard to the investing championship, do we have any idea yet how the top 3 achieved their extraordinary returns? Was it massive leverage plus great money management? It can't just have been down to good stock picking... or was it? They must have had a team behind them doing research and algorithms. My guess is it's impossible to perform that well single handed.

[faizulanuar]

Currently I am only using 20 weeks MA as my exit strategy, as you said, at least one indicator shall be used for exit strategy. I am not planning to use other indicators, since I like my trading plan as simple as possible. I have been spending most of my energy/time every morning to ensure my mental stability is most conducive for trading. In fact, compared to 3-4 years ago, when I would read as many technical/fundamental investing book as I could, now my library is full of trading psychology books. Having the greatest skill in the world is useless if the trader do not have the mental fortitude to execute his plans. Our subconscious conflicting beliefs often act against our best interest to gain profit from the market. Improving knowledge in technical analysis will improve our edge in the market, but fixing the subconcious conflicting belief is the key to grow our capital.