Periods of extreme price volatility have occurred for as long as there have been markets and they will continue to occur periodically as long as humans are involved. Its normal for this to happen from time to time.
The recent environment provides dedicated traders and investors a great opportunity to learn to process and prepare from their own experiences.
We Are All Participant Observers
We are all participants first. During big down swings, we are affected emotionally as I have outlined in previous posts. When you become anxious or panicky, it distorts your decision making capacities and market behaviors (buying and selling). You might become more erratic, over trade or not honor stops.
The key here is that your emotions and your behaviors are intertwined.
Also, we are all observers. While you are caught up in the action with your risk capital at work, you are also acting as an observer. You are analyzing the news and comparing the current period to past events. The key here is what you are attending to and the process you apply. In this case, focus and energy can be placed on your own experience.
Information Processing and Integration
If you take the time to focus on not only the external events but on your own experience during these periods it will pay dividends during the next and inevitable crisis whether it occurs next quarter or five years from now.
If you journal then focus squarely on what these days have been like for you. The more detailed the better. What are you worrying about. What are the thoughts running through your head at this moment and over the course of the past week and the upcoming one. What have you done well and what mistakes have you made. How are you coping and taking care of yourself away from the screens.
Then, you can reread this stuff and annotate as you think of new and important details you might have missed. The more vivid you get the better.
If you do not journal, then now is the time to start with this exercise.
The Gist
The gist is that by introspecting in detail, writing it out, editing and rereading, you will be taking the time to understand how these events are affecting you. You will be processing them and potentially better integrating them with both your internal participant and observer.
Then, the next time around, you will be equipped with a more developed internal schema of your tendencies. You will remember better and the events and your role will be better understood.
You will have a map.