One of the most frequently asked questions I get from traders at all levels of experience is how to deal with uncertainty. Undoubtedly we have a tough time to deal with uncertainty. This isn’t only true for traders, it is true for life in general:
Usually our discomfort around uncertainty is highlighted when we work towards a larger than normal goal
Traders and investors are particularly aware of the issue because they make more «important» decisions in the face of an uncertain outcome daily then most people. Your trading system may back test extremely well, you may use a fully automated system, or a fool proof hedge, none of these strategies ease the fact that our brains find it tough to deal with uncertainty.
We are having a hard time with uncertainty because your brain can’t see into the future
You read that correctly: From a neuro scientific perspective the brain can only see in the past.
It makes all its decisions from past reference points. Past reference points are the experiences that have built up in your life from the moment of conception to the present day.
The problem is that most of us have not had a plethora of blissful, positive experiences to fall back on, rather there is a mixture of good bad and traumatic, as the brain’s memory bank recalls it.
The discomfort of «uncertainty» is deeply rooted in our survival instincts.
Man has had a tough time to survive until now. Humanity is still in its infancy, relatively speaking. We are still operating is if we are living in an environment that is dangerous. The appearance of danger is directly linked to the level of our evolutionary development. The lower down the evolutionary scale you reside the more you are influenced by your environment. As you move up the evolutionary scale you begin to have more influence over your environment.
We have not yet adjusted to the next evolutionary step in our development which is using our mental muscle to co-create our lives in line with our desires. The fear of uncertainty is a survival emotion, hence it feels «natural».
Becoming aware of what you feel and understanding why you have these seemingly uncontrollable emotions and feelings is always the first step that enables you to initiate change.
Set the intention to become aware of your feelings of uncertainty, observe them for their validity. You will find that most of these automatic feelings are false flags.