Heuristics

Shortcuts or “rules of thumb” used for rapid problem-solving or quick decision-making. May include tried-and-tested methods based on past experience, educated guesswork or simple processes of elimination that lead to acceptable if not ideal or perfect solutions (“satisficing”). Heuristic analysis is sometimes used in finance to make quick investment decisions where there is only limited research or analysis available, or using limited datasets. Because speed is usually essential when investing, the ability to make a quick decision may be of more benefit in capturing market moves than delaying to engage in deeper analysis.

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