coping with volatility
Market volatility is the toughest test for financial professionals. It puts to test our understanding of the markets but where it REALLY gets rough is:
😬Testing our ability to manage biases; sometimes we want to take advantage and average down; sometimes we want to mark our profits; sometimes we mark some profits only to offset other losses; in all cases we need to work consciously to avoid falling victims of our minds;
😬Testing our reactions under stress: there are various studies that show that stress impacts our risk taking behaviour. Acute stress tends to make us take on more risk; as stress builds up we tend to become risk adverse. Manage stress to be in good form to manage money.
😬Testing our suggestibility. We become avid readers of market commentaries and market research and we tend to follow intraday movements more closely. All along we are unsconsiously primed and our behaviour can be influenced in ways that are hard to identify consciously.
There is really no way of avoiding priming but we can manage its effects by sticking to strict decision making processes that include challenging ourselves.
What do I do for this?
👉introspection when I feel the urge to act
👉Developed a decision making process that is designed to manage biases and sticking to it
👉I understood my propensity to different biases and managing them
👉I learned to make the difference between intuition and bias
👉By building on what I learnt about unsconsious
👉By using language consciously and purposefully when analysing a decision
👉By putting to use my knowledge of meta programmes
👉By ensuring that my decision making strategy is well balanced
👉By being conscious of my emotions1