Manage uncertainty

Do you view uncertainty as a threat and attack? Do you avoid uncertainty? Or do you approach uncertainty with curiosity? This is what is wired into your developing perceptual map by the mechanism of attachment.

A brain wired to look for certainty so he could feel safe found only risk management of uncertainty in the market. This threw his decision making capacity into flux and the risk aversive investor that he was got swept away into impulsive decisions in the heat of a trade.

emotions are biological in nature and take over our psychology. They are deeply primitive and do not recognize that we have a psychological nature. Helping us to survive instinctually is their nature. And implicit to the nature of an emotion, particularly fear and greed, is the motivation (what the emotion is urging you to do) and the meaning that becomes embedded into the emotion. Fear is going to push us to avoid discomfort and uncertainty – certainly important to survival.

Traders experience the fear of uncertainty in the form of hesitation. They are looking for the confirmation of the certainty that something is going to happen. In trading there is not certainty – in trading there is probability. In risk management the trader manages the uncertainty with the probability of success. The odds need to be in the trader’s favor. Unfortunately for traders, this is not the way our neuro-biology evolved. Your brain wants certainty even if there is little probability of something bad happening. This is called negative appraisal.