Decision Making and Group Intelligence

As I have been studying the benefits of Swarm Intelligence, I am reminded of some Forex Seminars that I did with Rob Booker. Rob and I noticed in a few seminars that if we divided people up in groups to trade, they traded better. This was an extension of what we were doing online. We were teaching massive amounts of people at the same time and it only made sense to divide people up into online collaborative groups. People then could answer their own questions and it lifted the load on us as instructors - especially Rob who was in huge demand.
Group decision making worked in some aspects and not in others. We noticed that in some of the groups, live and virtual, that the group could not come to a good clear decision. Mind you, that in trading in general everything can be simplified into either buying, selling, or going sideways (which is buying and selling so fast that the currency pair is just going nowhere). Arguments would ensue and people began to drop out.

People with the stronger personality (or experience)  usually persuaded the group to decide to do what they wanted.  Their trading usually was terrible.  We stopped forming groups after a while.

The Swarm Intelligence Solution

If I could go back in time I would do things differently.  One of the principles of swarm intelligence and decision making, is that the individuals of the group need to have some buffer of independence.  Strong personalities need to be guarded against.  Strong persuasive personalities really can mess up getting to the right decisions.  However, according to Len Fisher's book The Perfect Swarm taking the average decision of a group of people is very accurate.  So if I had a group of traders who were fairly well informed, make independent decisions on the direction of a currency pair, I would take all an average of all of their votes.  According to Fisher, this is very accurate.  


Additionally, when Rob went to work for IBFX as their head currency analyst, he studied the flow of traders decisions (this is extremely insightful information).  He noted that the majority of the traders were right in the overall direction of the market.  They just had poor money management and thus lost their accounts.  In other words, when the currency pair went against them, they didn't have enough capital to withstand the draw down on their account.  This meshes with the hundreds of interviews and email exchanges that I have had with traders.

Brokers with the ability to view the overall price action flow of traders could greatly benefit from taking the average of trader positions.  I would be very interested in what their findings would be.