Series: A Trader’s Diary on Fear 2
So when last we spoke about Fear we were in the water with the shark from Jaws hoping to hear the theme song. But do we really need to have a theme song? Don’t we already have internal indicators that take care of that? Before we get into a discussion about Fear, I think we need to lay some ground work.
As humans we are ingrained with the need to have an emotional commitment to all our decisions. For example, deciding what to eat for breakfast is going to require an emotional commitment. Hence, if you are rushed and need to get out the door, the decision to grab something quick can be as “right” a decision as the leisurely Sunday afternoon brunch. If we were to reverse those two decisions, the leisurely breakfast with the quick one, given the same circumstances, we wouldn’t be nearly as happy with our decisions.
The reason the decision feels “right” is because there is something of a greater value that we’re holding up as a standard. Perhaps the quick breakfast is chosen because we need to get to work or we have an important appointment to keep. That holds the greater value and hence we feel good about the decision.
Same can be said for the Sunday brunch. The desire to take some time for ourselves, perhaps spend it with friends and family, or we’re simply tired of too many quick breakfasts, is the greater value that we are holding dear. Either way, each decision has the feel of being “right” and we’re happy we made it.
Now I grant you the emotional weight of breakfast is not the same as investing in the market. What we can take away from our breakfast dilemma is an understanding of what is important in our lives and making choices that are in tune with those values. I’ve talked to hundreds of traders over the years and a common theme is the quest for the holy grail of trading. That “thing” (replace “thing” with indicator, software, course, advisory), outside of themselves, that will answer their trading woes. These searches, although profitable for some, typically yield poor results for the individual leaving the trader to take up a new quest in search of a new “thing” (more on that in a future posting.)
My ‘a ha’ moment as a trader came when my focus turned inward on my trading decisions. That the battle for success lies between my decisions and values that I either don’t understand or can’t acknowledge. Our feelings are a gateway to that understanding and acknowledgement. Being aware of those feeling is the first step.
In the next installment, I share my insights about the use of those emotions.