Dealing With Emotions When Betting And Trading
Published on 23/10/17
It is common knowledge to anyone who has took part in any form of gambling that our emotions can sometimes take over, affecting our judgement in the process. In this guide we will explain why and how our emotions gets the better of us, which often leads to poor decisions being made, thus losing money.
Dealing With Emotions
Anyone who has walked into a bookmaker on the high street, or used an online service to place a bet, will admit that betting and trading activities often reveals several emotions with in themselves. At first you may experience a feeling of excitement when you initially pace a bet, or it could be a rush of adrenaline if you are betting in play. Alternatively, depending on the outcome of the bet, a punter can feel utterly distraught or ecstatic, leading to other actions that may be unwise.
Whilst most of us understand our emotions with betting/trading, sometimes they can become faded due to being in an excited or saddened state; this is where we don’t recognise our emotions. It has been proven that managing our emotions will most definitely improve vital skills needed for trading and betting in-play.
The part of the brain that deals with emotional management is called the amygdala. This part of the brain acts almost like a memory drive. It stored all of our experiences, whether they are positive or negative, which then impacts the decisions we make in the future. We then learn from our mistakes or success.
You may have come across in Sport, or anything for that matter, that it takes 10,000 hours to become a master of a skill. Whilst this is widely agreeable in the field of sport, it is perhaps less likely to be accurate for trading/betting. This amount of time with learning to master the art of trading is way too much!
It is important to consider that a lot of time and effort will need to be put in to ensure one fully understands how the markets move, as they literally move all of the time. It is also important to remember that we all have various methods and speeds of learning, and there is no ‘one rule fits all’ method.
We develop our thoughts, feelings and potential actions based on our previous experiences, as mentioned previously. Connections in the brain are strengthened the more we repeat an activity, whilst unused connections become weaker the less we experience an activity. In betting, and especially trading, the individual needs to have the ability to identify value and risk as fast as possible. Once you have spent enough time analysing the markets then you will be able to subconsciously be able to recognise when a price is too high or low, and whether it is too risky or not.
Or brain has been developed in such a way that it functions by releasing emotion before thought. Everything we experience or think of is initially scanned by the amygdala before we act or think about it.
With both betting and trading, we think everyone knows what it feels like to lose a bet, especially a high wagered bet. We instantly develop a sudden rise in our heart rate and blood pressure, with the addition of heavy breathing. This is what we call the ‘fight or flight’ response which acts when we get into trouble. When this kicks in, our world feels like it has slowed down, and a decision/action is needed as soon as possible.
This reaction due to the Amygdala becoming hijacked, and our thinking is overshadowed by our instincts. Normally we can process up to four streams of thought at the same time, but when the Amygdala becomes hijacked, we find it more difficult to process more than one stream of thought. This leads us to not thinking logically, and can lead to us making decisions that may further damage your bank account.
A good example of this would be when you’ve built up a healthy betting bank from previous bets/trades that were successful. You then place a few trades/bets, but you begin to lose. You will feel robbed the outcome, and may immediately place a bet or trade on something to get your money back. This fails, meaning you’ve lost even more money, but you still want it back. With this, you may end up winning your money back and legging it, or you may continue to lose enough money until you get to the stage of regret, and realising how much you have lost. By then it is simply too late.
So, what can you do to stop yourself from making decisions in the heat of the moment?
STOP! – Stop means stop! Instead of acting immediately, calm down and regain control of your thoughts, otherwise the stress will lead us to make horrible decisions. Did you know that when we are stressed, we only use 5% of the information to inform our decisions?
Take a deep breath – We know you may experience a rush of adrenaline due to the fight or flight response, but taking a deep breath can sometimes stop you from making a decision too soon.
Accept the consequences – It is important to accept that you have lost, and as a result you have lost money. However, it isn’t the end of the world, and chasing lost money isn’t worth the additional feeling of regret that you will feel if you lose even more. Remember, money can come back through wages.
Reaching a logical decision – Instead of using the 5% of information available when stressed, keep calm and wait until you are able to think properly before making a decision.
One of the most important topics what the whole industry has brought up, is gambling responsibly. It is important to be sensible with the amount of money which we stake, so our mind doesn’t erupt if we lose too much money. You will often win whilst betting with a bookmaker, or trading with a betting exchange, but you will also lose too, so accept this before your thoughts are hijacked.