STREET DOGS: Fight, flight and 'scared money'
Trading activates the same primitive centres in the brain that are responsible for self-preservation, writes Michel Pireu
You have probably heard professional traders warn about trading with "scared money". According to Mark Douglas at The Disciplined Trader, "In the market, the fear of losing one’s fortune is every bit as intense as the fear of losing one’s life from an attack by a wild animal." We now know that trading activates the same primitive centres in the brain that are responsible for self-preservation. These are the primal emotional and defensive layers of the brain that do not respond to willpower (self-talk). In fact, the brain is hardwired to prevent you from turning off its primal circuits. Why? These processes, such as fight, flight and pursuit, have great survival value. When these ancient parts of the brain are in control of your trading, however, you will automatically do the opposite of what you consciously intend. It may feel like self-sabotage, but it is not diabolical … it is biological. It is difficult to manage an instinct, which is one reason why so many traders underperform a...
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