Hi Grant,
Yes. Good analogy and issues. I erred on the side of conciseness in my post above and lost clarity.
The interesting thing is that
you shouldn't even try to reduce the emotion. Trying is often going to be counterproductive.
I don't know if you are familiar with awareness mediation (vipassana etc) but recent research has shown some stuff thats quite useful to traders.
0. If you ignore or try to ignore emotions your level of awareness of the emotion may decline but the underlying impulse is still there. This is because our brain is comprised of different processing centres some of which we are conscious of and some of which we are not. The problem is that you may no longer be conscious of it (suppressed) but a suppressed emotion still creates impulses ... and the impulses may generate actions and the actions are what damages your trading. So suppression is bad.
1. If you focus on the emotion when you experience them and then NAME them your brain processing moves from the amygdala to the forebrain. In doing so the level of the emotion is reduced (and thus its ability to generate impulse and hence action). Not only is it reduced at that time but any primitive linkages with prior events (which may be amplifying the pressure/pain in trading) are reduced ... extinguishing in operant conditioning terms. This is one the big reasons why awareness meditation decreases negative emotions.
2. The problem for a trader isn't actually the emotion anyway (unless its suppressed and thus causes an impulsive explanation that they can't explain afterwards (the "why the fxxx did I do that" experience)). The problem is the action we take when an emotion occurs in the amygdala and generates impulse. So if you add a plan for what you are going to do when you feel the emotion you can do the right thing (more and more often) instead of the wrong thing. This extinguishes the bad behaviour.
Denise Shull proposes a 4 step strategy for dealing with emotions that fits the modern view of our brains. She calls it ANNA.
A Anticipate the emotions (know when you are likely to feel X and how much)
N Notice the emotion (you can't deal with what you didn't perceive)
N Name the emotion (and repeat the name - take advantage of your brain's neuroanatomy)
A Address the situation. Execute your new plan for when you feel fear, frustration, whatever.
So, we no longer try to reduce emotions. Instead we anticipate them so they don't surprise us, notice them when they happen because we expect them and focus on them, repeatedly name them so that they primitive brain loses control and there is extinction of some of the emotional linkages, and finally address the situation with a new behaviour which is productive and gradually extinguishes the old bad habit.
I have found this strategy effective for overcoming a couple of nagging issues in my trading.
So much for concise