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How many wins do you remember in comparison to losses? The reason is selective memory, the way we remember things.Our memories are shaped to a great extent by the present and we frame the past using this knowledge. The implications for our experiences of investing in a horse, greyhound or football team is fascinating.

According to a recent paper by a firm of financial analysts, flaws of memory impair our ability to learn from the past and contribute to our poor financial decision making. The report states bad memories tend to be blocked out by good ones. Just as we find it easier to remember the types of bet on which we have won money, we block out our poor financial decisions with other memories that are more pleasant for us. This conditions us to become overconfident.

Another memory flaw gives rise to what is termed “hindsight bias”. This is the tendency to look back and see events as being more predictable than they were before they took place.

The dangers of hindsight bias usually get learned the hard way. It promotes overconfidence by fostering the illusion that the world is a far more predictable place than it is in reality.

This gives gravity to the process of diary keeping whereby our bets and the grounds, the thought process, for them are logged. These writings will allow us to learn from previous mistakes. It will be harder for you to convince yourself that you knew something all along when you are faced with the evidence of how events unfolded at the time.

Cognitively, we get smarter through the generations but not emotionally. Investment decision making, be it poker or conventional gambling and trading is invariably an emotional process and so learning to master ones emotions is one of the most valuable things we can learn to do. If you want better to make informed decisions when it comes to your affiliate program and strengthen your affiliate sales force, be sure to consult with Mediadigitalagency.