[[Start Here]] → [[manage the monkey mind|Mindset]] → Action Bias --- ![[the bias to action needs intercepted.png]] Imagine you are a hunter on the Savannah in Africa. Your family is depending on you. You have been watching the herd in the distance for some time from the long grasses. A stray Wildebeest sniffs within earshot, and looks up to the moving herd. What do you do? We’re evolutionarily wired to take action, but the benefits of doing so are less certain in the knowledge economy, especially in markets. So let’s modernise the scenario. Imagine you are an investor lurking on Twitter. Your portfolio has been floundering. You’ve been watching the energy sector for some time. You read about a thrilling energy stock, which perks up as the market starts to rise. What do you do? In the former scenario, the hunter’s action will feed his tribe. In the latter, the benefits are less obvious. Yes, it’s easy to make the “kill” - it’s just a few clicks. But the profits or losses won’t be known for a considerable period of time. ==Action bias is our tendency to take action, even when doing so may be irrational, or harmful, to our interests.== When investing, we are presented with boundless opportunity to take action. As Mark Douglas describes in “[[Douglas - The Disciplined Trader|The Disciplined Trader]]”[^1], the stock market is an unstructured environment with limitless possibility. The less structure you create for yourself, the more your impulsive actions will be taken advantage of by disciplined actors. It’s all very well to aim for steely discipline, but most people think that’s a fantasy. The good news is that simply [[playing not to lose is a way to win]]. But what else can we do to reduce impulsive actions, and direct energy towards more positive behaviours? The first step is becoming aware of the impulsive thoughts and feelings that trigger action - what I refer to as [[manage the monkey mind|managing the monkey mind]]. If you journal or keep notes, start an emotional log. Write down your emotions, and when you calm down, reflect on them. What’s got you all worked up? Fear of missing out? The promise of big gains? Watch what really happens in the market when you *don’t* act. You may be surprised. Before every buy or sell decision, intercept your impulse by using a buy or sell checklist. If you’ve figured out a solid strategy, based on [[What works in stocks?|what works]], you can express it as [[simple rules beat human judgement|simple rules]] on a single sheet of A4, or in a digital note system. Intercepting the action of *clicking buy*, with the action of *checking your rules* may moderate high-strung feelings to the point of improving decision making. If you really struggle with self control, you can go further to reduce your ability to click stupid decisions. Remove trading apps from your phone, and block them on your computer. Force yourself to call your broker to place deals. Whatever you do, a great idea is to make yourself accountable to a group or ally. Whether that’s a mentor, online community or investment club, knowing you must talk through your decisions in review each week or month will give you pause for thought in the heat of the moment. Whatever you do, remember you aren’t wired for smart, instinctive decision making! > Never mistake motion for action. > **Ernest Hemingway** [^1]: [[Douglas - The Disciplined Trader]]