- Raluca
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:
๐ฌTesting 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;
๐ฌTesting 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.
๐ฌTesting 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?
๐introspection when I feel the urge to act
๐De-stress
๐Developed a decision making process that is designed to manage biases and sticking to it
๐I understood my propensity to different biases and managing them
๐I learned to make the difference between intuition and bias
How?
๐By building on what I learnt about unsconsious
๐By using language consciously and purposefully when analysing a decision
๐By putting to use my knowledge of meta programmes
๐By ensuring that my decision making strategy is well balanced
๐By being conscious of my emotions1