PSYCHOLOGICAL STUDIES HAVE shown that when you’re under high stress, you get dumber.
It can be difficult to remember what to do, or if you remember what actions you’d planned on taking, when you’re under pressure to act.
That’s why so many people have trouble trading when they don’t have a written trading plan.
It’s also why so many people get caught in ferry disasters or fires and why in a catastrophe, people often don’t even think of dialing the emergency services.
It helps to explain why 11% of sky diving fatalities are due to parachutists failing to pull the emergency chute.
Here’s the figure to remember… 75% of people suffer cognitive paralysis leading to complete inaction when under stress.
“No-one becomes smarter under stress” says Charles Morgan, forensic psychiatrist at the University of New Haven, Connecticut.
You have to train for emergencies. Pre-plan. Consider how you’ll react to a series of losses or one big loss in the markets.
The purpose of training is to create procedural memory to guide your actions when your thinking shuts down. It allows you to activate the script.
Read your plan. Follow it.
You wrote that plan when you were calm, clear thinking and lucid. Trust THAT version of yourself, not this out of breath, twitchy version of your pressured self.
