What a wild ride this week has been! If nothing else, it proves that the market structure really has tilted towards algorithmic trading. The relative extremes in point swings therefore don't actually mean as much in the big picture even if they do still mean the same in terms of points you can book or points you can lose.

How do you recalibrate your own mental mechanisms to deal with this kind of volatility?

First you start with realizing that the social context of trading does include a relevant number of robotic players. That may give you pause but it doesn't have to. Behind the algo's are humans and as this week has shown, they all tend to do the same thing - whether that be jump out of the way or jump on the trend. In times of less "headline risk", they conversely dampen volatility by being on both sides of the market.

We know that understanding and predicting markets in terms of their underlying human players helps the brain to more accurately perceive what is most likely to happen next. In short, this means we just need to factor in the fast robots to our expectations.

Also in these days of twitter time, it also makes sense to at least having a working knowledge of what "headline risk" is and how it can impact you. This too is a social question so you can be assured you at good at once you get oriented. For the foreseeable future, we are going to be subject to bits and pieces of news about political personalities that are going to move the market.

Imagine the market as a giant wave pool where people on different corners can turn on a switch and cause a wave. Yes that is going to make you temporarily feel more anxious and create a desire to have more certainty. But in fact, you really can't get that ... and your brain can work with markets through this context if you give it a chance. It was built to do so!

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