Of course you are panicky. I mean who wouldn’t be? Do we have any experience with major US companies, banks in particular, going out of business one right after the other? Have any of us lived through this? Even if you were alive and remember the crash of 1929 or the depression that followed it, you didn’t experience it in a 24 hour news cycle where each 12 hours brought the next major name to either its demise or the brink of disaster. This is scary stuff…

and it would be ultimate in irrationality NOT to be afraid.

But alas there is a difference between feeling fear and jumping out the window.

This idea is central to making the best decisions – whether you run a big hedge fund or your own modest trading account. Feelings, thoughts and actions are three separate things. The best way to decide on the most rational action is to experience and analyze the feelings that are being induced in you by the market’s behavior.

Oftentimes taking an action is simply a way to reduce the discomfort of a feeling. Instead, try to figure out what you are feeling and what is really driving it? If you allow yourself to go through this process of “emotion analytics”, it will become much much easier to choose actions that make the most sense.

Turn off the tv when they tell you to calm down … the quickest way to calm down is to give your feeling their due-listen. Attempting to ignore them only makes them more intense.