Learning from Mistakes

What this unit covers

Learn a post-mortem habit for a decision that went wrong: separate a real process error from ordinary bad luck, without excusing the mistake or punishing yourself.

By the end you will be able to

• Judge a decision by whether it was reasonable at the time, not by its result.
• Use two questions to tell a process error apart from ordinary bad luck.
• Decide what, if anything, to change after a financial setback.

How it starts: A Loss You Studied For

1. You study a company for three months before buying its shares.
2. You put in 60,000 rupees, and the price falls 18 percent within a month.
3. Was your homework wrong, or did this loss have nothing to do with it?

Words you will meet

Outcome bias

Judging how good a decision was by its result, instead of by how sound it was when made.

Variance

The random part of a result that even a sound decision process cannot control.

Debrief

A short review of a past decision meant only to improve the next one, not to judge the last.

In this module: Continuous Improvement

1. Building Repeatable Systems
2. Learning from Mistakes (this unit)
3. Personal Trading Dashboard
4. Becoming an Independent Decision Maker