Picked this up from The Kirk Report: Brett Steenbarger compares trading to the process employed by novice and expert doctors to diagnose a patient and in the process sums up the idea of Reasoned Investing better than I can.

He notes that the novices "employ what researchers call backward reasoning: they jump from initially presented information to diagnostic impressions and then move backward from their impressions to identify data that support their views." W the expert doctors "employ 'forward reasoning.' They collect a wide range of data that are relevant to making differential diagnoses. Instead of jumping to a single conclusion, they have in mind several possible conclusions and collect the data needed to distinguish among them."

Summing it up by stating that, "Ultimately, what physicians and traders learn is not just a fund of knowledge, but a method of reasoning. What makes a good trader may come less from the trade ideas themselves than from the forward reasoning process used to generate these ideas. Traders who keep journals and work on their performance may want to think about monitoring more than their moods, trades, and profits/losses. They also need to think about their thinking."

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This posting also available at www.reasonedinvesting.com

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