Separating Fear from Uncertainty

What does this post open or close for you as a trader?

Trading does not come natural to the human brain. For the vast majority of traders, it has to be learned. From an evolutionary perspective, just a few short years ago we were all cavemen. In your ancestor’s world there was no reason to separate uncertainty from fear. The world was a dangerous place and if you experienced uncertainty in your dealings with your environment, there was a good chance you were facing a mortal threat. Uncertainty became glued to fear and anxiety as a survival trait. And that trait got transmitted to future generations -- long after the usefulness of glueing uncertainty and fear together.

Your inner caveman still lives within you as you trade. Your limbic brain (caveman’s inheritance to you) still is still watching his environment (your trading screens now) and interpreting from an evolutionary bias that locks uncertainty and fear together – rather than distinguishing them from one another. This deeply embedded trait has also been uploaded into your psychology. This is the psychology of self that trades and experiences worry and fear when you are supposed to be impartially managing risk with your trading plan.

Separating uncertainty from worry and fear (more primitive parts of your survival brain) – caveman – is what is required for a trader to evolve from fear based interpretations of uncertainty to risk management interpretations of uncertainty. So if you're having difficulty moving one set of psychological skills that proved okay successful in one domain of your life to success in trading, welcome -- this is typical. There is nothing "wrong" with you. But it does indicate that the "you" that your brain has organized you as needs to be changed. And that new psychological skills will need to be developed to replace your inheritance from caveman. Otherwise caveman will continue to participate in your trading. That's all.

The mindset for the vast majority of traders has to be developed. Particularly the management of uncertainty and the meaning that becomes embedded tin he meaning making pathways of your brain (that's your perception). This is where you will find your self limiting beliefs about yourself. If you experience hesitation as you evaluate set ups for risking capital, if you are seized with fear as you try to pull the trigger, or if your heart pounds as you enters a trade (particularly when it goes against you), you are experiencing a biological predisposition that has shaped your personal psychology to avoid uncertainty -- that's your caveman trading along side of you, perhaps even taking over. It is the mindset that you take into uncertainty (that's trading) determines the probability of success.

Evolutionary and psychological bias, in the vast majority of traders, will have to be examined and changed for this to occur. It takes emotional labor, and that's the price for re-development of the self designed for trading. It's a great personal development adventure. Traders often invest years in learning to know the self and developing a psyhology that trades effectively. This process is unavoidable.

Where are you in the evolution of this process?

Rande Howell

That is really interesting post. It was useful and nice reading it.
But to answer the question is rather difficult, just because everything is seen in a better way from the side but not internally. So it's not for myself to judge.

Whilst not 'word for word' you've stolen this musing from another source...

There is no permanent destination in the evolution of a trader's mind. Generally at the start, there is a desire for a better life and more time. Then they fall in love with trading. They latter invest in their platform and methodology, believing that if they only find the right combination, they will find the Holy Grail.

Later they discover that they themselves are the Holy Grail. But it going to take a lot of work. It is this process of bring forth a new way of being in the world -- of understanding the uncertainty of trading and life -- that we move beyond the obsession with certainty and begin to accept probability. Our biology has to be tamed for the mind to master uncertainty. But if you're going to trade, it is a necessary step. It is this process that I'm opening up for observation.

Rande Howell

Black Swan clearly higher up the evolutionary scale then than Rande Howell.

I write my own stuff. Maybe a different tree. RH

Forex trading is a mental game and we need improve ourself every day to be a better trader.

Let's keep aside concerns of the source of this article - what I really like is the caveman analogy - I had not thought of trading that way - though oftentimes I would feel that life in general in modern time is not very different from those caveman days - only the tools and landscape has changed, nothing else.

Thanks to the originator of this post for tying up trading to the psychological throwbacks of the caveman days.