Trading strategies can be divided into two categories based on their return streams: convergent and divergent. These two different mindsets affect our risk-taking behaviour differently. Risk takers who think that the world is static and can be modeled and predicted over a reasonable time period tend to be convergent. Conversely, divergent risk takers are rather skeptical of their knowledge of the world. They believe that since the world is unpredictable and dynamic, we have structural ignorance.
Convergent and divergent risk taking
Convergent and divergent risk taking
Convergent and divergent risk taking
Trading strategies can be divided into two categories based on their return streams: convergent and divergent. These two different mindsets affect our risk-taking behaviour differently. Risk takers who think that the world is static and can be modeled and predicted over a reasonable time period tend to be convergent. Conversely, divergent risk takers are rather skeptical of their knowledge of the world. They believe that since the world is unpredictable and dynamic, we have structural ignorance.