I received a real shock at the weekend.

We had some friends over for dinner – my oldest mates and their wives/partners.

We don’t get together often. Three or four times a year at most. But when we do it’s just like old times – the ribbing and stories of infamous misdeeds start to flow, and the evening ends with jaws aching from laughing so much.

But this time was a bit different.

I’d missed a call from K on my mobile and when I phoned him back I was expecting a hiccup in proceedings; they wouldn’t be able to make it on Saturday night, or they would be running late or something. But nothing could have prepared me for what he actually said.

‘I wanted to be the one to tell you, Rich, but my sister died yesterday.’

Slap! It was one of those moments where time seems to stand still.

K’s sister was a couple of years older than us. I remember her arriving home from work while we were at K’s house, munching on bits of toast after school.  As soon as you heard the gate clang you jumped to attention, adopting the coolest pose you could ready for when she walked into the kitchen (while K shook his head at you in disgust).

She was smart and glamorous in that way friend’s older sisters are to teenage boys. I knew she’d been ill recently but this came as a total shock for everyone.

I passed on my condolences to K, blabbered on a bit asking him if there was anything we could do to help (I’m still cringing about my shocked reaction over the phone but it completely caught me on the back foot!) and told him to keep in touch and that we’d see them soon.

‘What are you talking about – we’re coming round to yours tonight aren’t we? We’re still coming; it’ll help me take my mind off things.’

So Saturday night was spent reminiscing and laughing with even more gusto than usual!

Managing mental energy in times of turmoil

Emotionally charged events like this can affect you in two ways: negatively or positively.

They can bring your own life into focus like nothing else. They make you aware of your own mortality and of how fragile the balance of life actually is. And when you realise you have no way of knowing what might be right around the corner, they can be a clarion call to do more of the things you love, and take bigger risks to in order to do them.

That’s the positive side – you can draw down super human amounts of drive and get-stuff-done energy.

The negative side can be a slide into dark-thinking and depression. It’s totally normal (and healthy) to go through a grieving process of course. The key is to get help if you’re struggling to come to terms with things.

So it can be a rollercoaster of up-days and down-days for quite some time, even for the most upbeat personalities.

(I know this well. I lost my own brother to a car accident some years ago.)

And luckily, from the conversations we were having on Saturday night, I think K is drawing positivity from recent events. He was talking about making some robust and healthy changes to his lifestyle and I wish him well.

But with all the heightened emotion, and change-creating thinking that can flow at times like this, is it possible to rush into decisions without giving them proper consideration?

I think it is. There’s no doubt you can harness this energy to create positive change, but the risk is that you can go about it in too gung-ho a way while your normal filters are down.

The last thing you want to do is create more problems for yourself at times like this. So how do you know when it’s OK to go ahead with your new plans?

Here’s a brilliant piece of advice someone once gave me:

You’ll know you’re thinking straight when your sense of humour returns.

Now that’s a very personal thing. One person’s sense of humour will have them life and soul of the party, cracking everyone up with jokes and quips. For someone else it might be a mild sprinkling of schaedenfreude – the pleasure derived from someone else’s misfortune – like when you can’t help tittering at people tripping over the pavement as they walk because they’re trying to send text messages at the same time.

So whatever it means for you personally, carefully monitor your sense of humour levels when making decisions in an emotionally charged environment. When your sense of humour is intact, you know that you at least have the ability to maintain a balanced perspective.

There are even scientific studies into the correlation between sense of humour and levels of creative thinking. I’m not just making this stuff up!

But let’s look at things in trading terms…

If a trader suddenly announced he was going all in – long gold, the trade was outside his normal patterns – and I knew he’d been going through some stressful times, I’d have to recommend he take full stock of the situation.

Had he really uncovered a high-probability opportunity that warranted the size of trade he’s considering, or is he riding the winds of emotion?

Only he’d be able to tell you for sure (but my money would be on an emotional response rather than a carefully considered one). He’d have to do a sense of humour check to know where he really stands.

And it doesn’t just apply to out-of-the-ordinary trades either. I’d argue that the very last place to be after you’ve received shocking news, or had a blazing argument with someone, is in front of a trading screen. The potential damage you can do while you’re emotionally off-kilter is simply too great.

Remember that staying flat (holding no position) is just as valid a trading decision as buying or selling the market. In fact, it’ll probably be the most profit-retaining path to take.

Wait until you can see the funny side of things again, at least to some degree, before you re-engage the markets. It’s the best benchmark of a return to a normal mindset after unexpected events.

Go and watch your favourite funny film or comedy program to test your humour levels. It might even help you get back to normal thinking. And if watching TV during market hours raises any eyebrows, you can always put it down to laughter therapy!

Be Prepared: Market Moving Data Coming This Week (London Time)

Wednesday 12th August:

09:30    GBP    Average Earnings Index

Thursday 13th August:

13:30    USD    Retail Sales

Friday 14th August:

07:00    EUR    German GDP

10:00    EUR    Consumer Price Index

13:30    USD    Producer Price Index

Monday 15th August:

- no big reports

Tuesday 16th August:

09:30    GBP    Consumer Price Index

13:30    USD    Building Permits

We’ve a sparse week ahead in terms of scheduled data, but do keep an eye out tomorrow morning (Wednesday) for the UK wages report if you’re trading cable (GBPUSD).

Until next time…

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