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Overcoming our Fight or Flight Instinct to Trade Better

All of us approach trading in a different way. Depending on our age, gender, social status and experience we are more or less patient or aggressive. But one thing lies beneath the surface of all of us – our fight or flight instinct.

Some are more analytical and good with math, others go with their sixth sense. But our brains, at their core, are the same – some reactions are universal across cultures, continents and are universally human.

Fear and aggression are parts of us whether we like it or not. The challenge when it comes to trading is that this primitive part of our brains is very active when we’re on the markets.

Risk isn’t found so often in our lives anymore. Our daily lives have changed within a very short span of time from an existence full of threats, to one where risk and danger can almost entirely be eliminated. Some of us even look for risk to feel real and alive.

Fear and uncertainty go hand in hand. But that’s not how it should be in trading. Fear is our strongest asset when it comes to self-preservation, our caveman part is still very much within us when we open a trade. It reacts like there is a physical threat when the position turns negative and we’re losing money.

Instinct in Elliott Wave Trading

Feelings like this one can be overwhelming and can overtake the rational part of our brains. But the paradox is that the rational part is the one handling a complex set of steps – opening and closing trades on financial markets, determining position sizes and the length of the trade. Fight or flight wants to control everything.

Our limbic system kicks in and causes us to revert into a more simplistic way of thinking. This thinking doesn’t have a trading plan and is impulsive at the exact times when it should be thinking before acting.

This isn’t a sin. As we mentioned – it’s a part of all of us, even experienced traders can get caught in the moment and let go of their discipline. Don’t think of this as a mistake that has to be fixed immediately. It’s the way we are and it takes time and practice to overcome it.

Dangers related to the fight or flight instinct come from two directions. Fear powers uncertainty and anxiety and they can make you leave a trade before it turns green. But if you let your “Fight” response take over you could actually do more damage and leave a losing position go on for longer.

fight or flight instinct in trading

The Fight instinct is also found in traders that make all-or-nothing trades, where they gamble all of their remaining deposit on trying to get their losses back. We all know how that usually ends. Risk management is key here.

Coping with these two challenges is possible with experience and training your mindset to do what is best for trading. Hesitation and doubting your decisions are something that you have to take in your stride, especially when you compare it to almost all other things we do in our regular lives.

Feeling anxious and a quicker heartbeat when you open trades or look at how they’re performing will happen a lot, especially in your rookie period. This is a sign of your primal instincts trying to take over.

Decreasing them and ultimately fading them away should be your goal. This can happen through consciously expecting them to happen. Then comes their acceptance and management. Because trading is not about the currency pair you’ve chosen, or the trend or what news has come out. It’s about you handling pressure.