Bright Minds

Bright Minds is a new podcast hosted by Money Manager and Trading Expert Patrick Munnelly. Through insightful conversations with notable guests, ranging from economic forecasters, to psychologists and experienced traders, we seek to answer the most commonly asked questions around trading and investing. Bright Minds is not just another podcast about trading: it goes deep into the psychological aspects of trading, such as tips on how to handle trading losses and on the trading mistakes to avoid. Listen or watch to the full episodes: www.tickmill.com/tools/bright-minds-podcast

Fear: the main obstacle to success

A recent Capital One survey showed that 77% of Americans are anxious about their financial situation, and this will inevitably hold people back from investing. What’s worse, fear can make those who invest act in ways that damage and limit their success in the market.

Fear may cause traders to close out positions before they should, or refrain from taking any risk because of emotive concerns, therefore missing out on great opportunities. So, how can traders overcome fear in trading?

To talk about that, Patrick Munnelly invited Tony Blauer for a conversation. Tony has been on the forefront of martial arts and self-defence education for over 40 years. He founded Blauer Tactical Systems in 1985 to focus on performance psychology and tactical training. His SPEAR System, which focuses on psychology, physics, and physiology, is used by law enforcement organisations globally.

A conversation with Tony Blauer, martial arts expert and creator of the SPEAR system

Patrick: Tony, could you start by sharing a bit about your career, your personal experience with fear, and what drew you to study it?

Tony: Many people find it intriguing to hear about my work in law enforcement, the military, martial arts, and even with professional and amateur fighters. But the most important and often overlooked aspect of our training is understanding how to manage fear. We have a saying: those who manage their fear manage to fight. "Fight" here doesn't guarantee victory, but it does mean you're in the fight, able to perform.

Fear has been a constant throughout my life. Even now at 62, there are things that scare me. I have three children, each doing their own thing, and I find myself constantly worrying about their wellbeing.

Looking back at my life, I see how fear has influenced each decade. Yet, understanding fear can turn it into a catalyst for action. For many of us, our relationship with fear is negative. But when we truly get to know fear, we can use it positively.

As a child, I was an all-round athlete, but I was always scared – of not making the team, letting down my father, losing a game, or being judged. Even as adults, we face similar fears, often manifesting when we prepare for a meeting or social gathering.

Recognizing where these fears come from is like developing a superpower. This self-awareness leads to critical thinking, which then enhances situational awareness. This is applicable in all aspects of life, particularly in finance and investing.

Patrick: Why do you think fear is such a strong motivator?

Tony: There are certain innate fears, such as the fear of snakes, spiders, and falling. Aside from these, most other fears are learned or taught by society, parents, or mentors.

Consider the well-known trading psychologist Mark Douglas's analogy of a child and a parent meeting a dog. If the parent had a negative experience with dogs and conveys fear, that fear could be instilled in the child, regardless of the actual threat the dog may pose.

This fear extends to other areas too. For example, many people harbor a fear of money because of the common saying, "money is the root of all evil". Even an imagined fear can impact a person's behavior and interactions.

Patrick: That brings me to another point I wanted to discuss: the victim's vocabulary. How does this affect performance?

Tony: If we have several good days in a row, we start to anticipate something bad happening. This is especially true for entrepreneurs, who experience more failed deals than successful ones.

Patrick: That relates well to investing and trading. More often than not, you're receiving negative feedback from the markets or investments you're involved in. The investments that work out and payout are the minority. But as long as you manage your internal states, allow good opportunities to run, and have no fear about cutting bad opportunities, the balance of probabilities ultimately works in your favor.

Tony: We often imagine more fears than we encounter in business and life. Let's consider an example. We've all left our keys, wallet, or phone somewhere and experienced the instant fear when we realize it. Or when you've left your hotel room, and the door is closing, and you realize you've forgotten your key inside. You experience a dramatic reaction, even though you know there are more keys at the reception. This exaggerated response is similar to how we react to sudden market changes due to unforeseen events.

In these moments, we respond with doubt, hesitation, procrastination, and overreaction. However, if we learn to understand this system, we can take a moment, reassess, and think about the next logical step.

Patrick: Is there a mechanism that can help us recognize the reaction and shift to a response quickly?

Tony: Inspired by a military training, we need to shift from reacting to contact to pre-acting to contact. Pre-acting involves scenario planning and understanding the emotional and psychological system. If we know how our minds will respond, we can manage stress and fear better.

Self-awareness is a crucial superpower. Without it, we spend more time in the fear loop, and this time can't be regained. Fear, or False Expectations Appearing Real, slows us down, while business and finance require speed.

Increasing our self-awareness allows us to recognize when we're in the fear loop, wasting time. Managing fear means managing time, a precious resource.

Tony’s free PDF, called “Making Friends With Fear” can be downloaded here:  https://getknowfear.com/e-book1

Questions, feedback, suggestions? Reach us at podcasts@tickmill.com