Have you ever wondered why we make such bad decisions in our lives? We all do it to varying degrees don’t we?
That moment you shouted at your kids, only to then later regret the way you dealt with it. The guilt you feel for days afterwards.
That moment you screamed at that other driver on the road, only to make the same mistake yourself a few hours later and realise how hypocritical you were.
That time you just lost your rag over something minor, only to later ask yourself “why did I do that?”.
However, these are all normal signs that you’re a human. When we’re in a state of trauma (physical or psychological) our brain begins to shut down the non-important areas of cognitive function. In stressful conditions it can begin shutting down logical thinking.
Well, your brains job is survival. Simple. It will do everything it needs to do in order to keep your alive. It will literally take over and say “sod this, i’m taking the controls”.
In that moment of stress or trauma your brain decides that there is a threat to you. So when it feels a threat, it begins to do its job and take over. It begins to shut down logical function. It shuts down blood flow to your limbs and keeps it near your heart. It can even shut down eyesight if it needs to.
Ever seen someone in shock? Maybe after an accident? Cold hands? That’ll be the blood being directed to the heart to keep them alive. Blurry vision? You don’t need your eyes to survive so sod those. Not quite in the room with everyone and seemingly on another planet? The brain doesn’t think you need to be aware right now, its fighting to keep your heart pumping.
It’s like captain James T Kirk in Star Trek diverting power to weapons during a battle. He doesn’t need the engines right now, he needs firepower, and Scotty’s giving it all he’s got.
Your brain makes this decision for you. You can’t control it.
And so in the key moment……
When you are feeling the stress……
You make a bad emotional based decision, not a logical one. Because you can’t think logically in that moment.
This is precisely why you make bad trading decisions when stressed.
When you are at the tail end of a 7 trade losing run, and the 8th signal comes along, the logical thing to do is to take the signal. But we don’t, we allow our fear to override us and talk us out of taking it.
The trick here isn’t to retrain your brain to never feel emotion. You can try that, but it’ll take a lifetime to achieve, if you ever achieve it.
No, the trick is not feeling that stress in the first place. Eliminate stress from your trading, and you’ll make better trading decisions in the moment.
What’s causing your stress in trading? How can you reduce that?