For many traders, me included, waking up to a big sell-off is very exciting. The feeling that there is money to be made reverberates in my gut. In fact, that feeling borders on fear of missing out. Fear of missing a bounce, fear of missing another leg down and sadly, a tinge of regret for the long $VIX I sold on Friday even as I knew it had more in it.
In short? Identify and sort.
Identify all the feelings you can and sort them according to their source or their domain. For example, you may feel great about the short you left on but definitely not so great about your core long term position in $AAPL. To try to set aside that conflict is only to make it harder to take the right trade mid-morning.
Instead, invite the conflict in and write down which feeling applies to which aspect of the situation. Research is gathering evidence for the value of putting feelings into words. Leading scientists are saying it may be the best way to avoid biases. It certainly has shown the effect of actually calming people down – the opposite of what they expect.
We all have a bunch of feelings in the midst of this kind of market drama. To paraphrase Sun Tzu in The Art of War, those who know themselves have a much better chance of besting their enemies.