I was interviewed recently by Kira Brecht on the topic of Brain Freeze. Kira was acting as a free-lance journalist for this article, but is also the Editor of TraderPlanet.com and a very good writer.
“Brain Freeze” isn’t a technical term, and it’s not what kids get when eating ice cream too fast–it’s what some describe as becoming immobilized by fear. It’s actually a part of our genetic coding and forms a portion of the fight-flight response. (Scientists view the full response as the fight-flight-freeze response.) The freeze is easily seen in prey animals who have been captured by a predator (say a gazelle and a lion), who freeze and appear dead causing the predator to lose interest and walk away. Moments later the gazelle stands up, shakes herself off, and runs away. It’s a last-ditch effort at survival used when fleeing or fighting have failed. Think of playing dead if confronted by a bear.
Traders mean something different than an adaptable survival response when they refer to brain freeze. Perhaps the best example is a trader deeply underwater as the market swiftly falls. Rather than being able to close the position, the person freezes, unable to act–not very adaptive. This is discussed in the article and at the end, I give a few suggestions on how to release oneself from being frozen.
The article is in TD Ameritrade’s Ticker Tape Monthly and can be read here:
http://www.tickertapemonthly.com/2014/june/?accept
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