Trading and the squirrel effect

Where I live we have a lot of squirrels.




Ive often wandered to myself why it is that these little critters jump out at the last moment in front of my car and make a mad dash to the other side of the road? I don’t believe its simply confirmation bias that I notice this, Im sure lots of squirrels cross the road when there are no cars around but how can I know for sure if I am not their to observe it? As far as I know, they only cross the road when cars approach.

So anyway, over the weekend after another near miss I started thinking:

1. Is it an initiation into the group? The closer squirrel gets to the tyres the greater his reputation amongst his peers?
2. Is it fight or flight? The squirrel is paralysed with fear until the last moment when flight response kicks in?
3. Are they thrill seekers. Do they wait on the edge of the road like junkies waiting for the next hit of adrenaline?

Personally I think that these little critters panic at the last moment. They see the vehicle as a predator. The vehicle is noisy, big, and its heading straight for them. Flight response kicks in and the bolt. Sometime this results in dead squirrel and other times lucky squirrel.

I suffer from the squirrel effect at times.

Lets say I have a plan to go long when price reaches a level.
So I draw a line at support (my safe place) which is some distance from price (the predator).
Price heads in my direction. Gathering momentum. Looking unstoppable. My prior fortitude starts crumbling. I get nervous. Price gets closer. I start panicking. My safety place is compromised. I become the squirrel. I bolt (go short instead of long).

Sometimes Im a lucky squirrel, but most times whenI dont stick to the plan Im a dead squirrel.


My take from this:
Don’t be a squirrel. Stick to the plan.