In this vacuum of announcements, up dates and news the two primary emotions which surface easily are fear and anger.
Fear, from an evolutionary point of view serves a very important function. However, often these days the fear which humans generate is irrational fear. In other words, we start projecting in our imagination certain events and outcomes associated with them. Projections like Novartis bailing out, the FDA rejecting further products, not having enough cash to run trials etc. Fear merchants, of whom there are plenty on HC, will stoke this particular emotion with unsubstantiated claims and half knowledge. I am not saying for a minute, that the above scenarios are not possible but the fact is, that we don't know if these possibilities will eventuate or not, nobody does. Not even SI. So what can we do instead? Assess the possibilities of these events happening through research and refining your trading plan and acting accordingly. For people who dismiss the psychological aspects of trading I would remind them, that there is a Fear and Greed Index which is very accurate in predicting market movements. The higher the Greed factor is, the bigger the chance of a crash. The opposite is of course also true, the bigger the fear the higher the chances of big gains. This lends some credibility to posters who claim, that institutions and individuals are after cheap shares by creating fear in an investing community.
The polar opposite of fear is anger. Anger can vary from impatient foot tapping, blaming the CEO of a company to killing people. Anger is the most disputed primary emotion as it is seen fairly late in the development of children. Angers gets activated through a negative event, words, action etc. creating tension which in turn needs to be resolved through some active behavior or actions - on HC this tension often gets resolved through responding to trolls. Whilst anger has it's place I would argue that now it is not the time to harness the power of anger. When one is angry or fearful, they are seldom reflective and resourceful.
When the emotions of fear or anger are fully triggered the amygdala is most active. Neuroscience shows clearly, that when the main brain activity is in the amygdala the blood flow between the amygdala and the prefrontal cortex is reduced. Neural pathway activity between the two parts of the brain is also reduced and the prefrontal cortex cannot assess if the perceived threat is valid or not. Remember the prefrontal cortex is responsible for focusing one's attention, predicting the consequences of one's actions, anticipating events in the environment, controlling the impulses and of course managing ones emotional reaction. So when one is investing or making decisions, the prefrontal cortex is the place to be. There are a number of ways to improve and stimulate your prefrontal cortex. Practicing mindfulness is a major contributor.
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