The 3 fear reactions and how they can affect your investments

By PsyDoc | Mindsetprofit | 20 Dec 2021

Most people think that financial success is only a result of good and analytical decisions. The people that had traded on stock market or cryptos know that is more than this. Knowing how to control the emotions is an important skill to master. And knowing how our mind works maybe help in some moments.

One of the key concepts to understand how we deal with fear is the fight-or-flight-or-freeze. it is a physiological reaction that triggers when an animal encounters any type of dangerous event. You probably had seen on Discovery Channel a lion attacking a zebra, and you remember that when the zebra saw the lion and it run faster then ever. This is the first reaction, flight, in that case run. The other reaction is fight, let’s think now with more balanced animals, a cat and a dog with the same size. The cats sometimes decide to fight a dog, they could run but they start to attack. And the last one, the freeze reaction, you should also saw on television some programs talking about animals like buffalos or alligators and the animal trainer said to the people that is close to them: “Don’t move” and it is not going to attack you.

The humans also have these reactions, if a snake or a big spider enter your house first you run than you think. If someone with a knife tries to rob you think in fight against him (you shouldn’t, never knows what is going to happen). And if you have a job that someone needs to do a risk task, you stay quiet for another person goes first.

On our trader’s life this could appear in some ways. If you had a crypto that has a good fundamental for a long-term position hold, any bad news for the market is a fear that is trigged, and sometimes one of them makes you sell, this is the flight reaction. Sometimes you buy a crypto and you lose some money, you start to fight the market, you buy another one to recovery your lost, and you lose again, and borrow money go to a micro coin and lose again, this is the fight. And sometimes you bought a crypto and you plan is clear, “I will sell if the price hits less then $12.00” and the price goes down, it hits the 12.00 and you just don’t sell the prices goes to 11.00 and you are waiting for a miracle to goes up again and can’t follow your plan, this is the freeze.

The fear has a utility, it is an important aspect for our survival, it help we identify threatens and save our life. We have less risky situations on our modern life to fight for survivor, but the mechanism of the mind is still very active. As we can see the fear affects our decisions and knowing the types of reactions could help we identify our emotions.

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