Low Frequency Events

Stock trading is a high frequency event. How frequent, well an eye blink takes about 300 milliseconds, in that time 10 trades have been made due to programmed algorithms. Imagine how many trades are happening per day. It’s enormous!

Pandemics are low frequency events. The last major pandemic was 102 years ago.

For people who are in the world of stock trading, they have a good understanding of the mechanics of the system because they are able to observe the trades so often, everyday.

For low frequency events, our brains aren’t equipped with a strong model for dealing with them. They come along so infrequently, we don’t have experience. While there was probably a handful of people alive today that lived through the 1918 Spanish Flu, it’s such a small percentage, and they were likely so young at that time that they don’t have much insight.

Our minds build mental models by interacting with certain experiences. Low frequency events don’t lend themselves to have a useful model, as a result, predicting a reaction to one is nearly impossible. Contrast that with a rising stock price, which based on plenty of past data can predict how the fluctuation in price will affect future purchases and for low frequency events it can be seen that we are shooting in the dark.

Applying this to people and their jobs, there is a preference in each individual for low vs. high frequency events. Personally, I like dealing with low frequency events. The challenge of how to solve something I’m not experienced in gets me into the flow. However, based on study of personality types and conversations with others, this is an exception. Many people prefer working in tasks that are high frequency. Tasks that they can practice and practice and become extremely skilled in.

It’s worth understanding where you stand on this spectrum and what you enjoy dealing in.