Do successful traders respond from a different part of the brain than unsuccessful traders?
Research in cognitive neuroscience tells us that, when we are calm and focused, we are most likely to be activating our brain’s prefrontal cortex, which has been called the “executive center” of the brain. It is these frontal regions that are most active when we are reasoning, planning, and making decisions. During times of stress, regional cerebral blood flows tend to move away from these frontal areas and toward motor regions, to help us with our “flight or fight” responses to danger. As a result, it’s precisely at those stressful times in markets that we’re most likely to be challenged to stay calm, focused, and centered in our executive functions. Rather, under stress, we tend to act out our fight or flight in markets, often making hasty and ill-considered decisions. Successful traders learn to normalize losses and uncertainties in markets, so that they stay more continuously grounded in those executive functions. How must traders deal with financial fear, and how, psychologically,
