a horse
is grazing
in the woods.
suddenly he notices a lion at a distance!
horse keeps grazing
but with heightened awareness,
while simultaneously keeping a watch on
and interpreting signals from
lion's behaviour.
finally he sees that the threat is real!
his stress response gets activated.
now
his head will
either ask him to fight
or fly away
to safety!
this is known as the fight-or-flight response
a third dimension is also there
the horse may neither fight
nor "fly away"
but freeze out of fear!
the fight-or-flight response now becomes
the fight-or-flight-or-freeze response!
this interesting phenomenon was first recognised and explained
by the american physiologist walter bradford cannon.
when faced with danger
the prey experiences
accelerated heartbeat, erect hair, pupil dilation, etc.
all typical signs
noticed in traders
when a trade goes wrong!
but even walter cannon would have agreed
that stock market is a place
where
neither fight, nor flight nor freeze works!
when you fight
you are against the trend
and are dragged mercilessly!
when you fly away
you have already booked the loss!
when you freeze
your account melts!
almost always
and inevitably
during trading
a trader's fight-or-flight-or freeze response system gets triggered!
to be a successful trader
one must learn to switch it off immediately
by force!
and opt instead
for
follow-response!
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