Last week ended with what to me was a startling juxtaposition - straight up Thursday morphs into straight down Friday. Reading the upper left paragraphs on the front page of the WSJ from the two days was actually funny.

And if nothing else it goes to prove how fast the market, an investment or trade can turn on you. This in turn points out how adept at decision making we all need to be.

Now what makes one adept at decision making? Specifically what makes one adept at decision making in a neck-jerking environment?

The first element in preparation is not only intellectually understanding but internalizing the environment in which you make decisions. Essentially you can think of the difference between intellectually knowing and internalizing as experience. With experience, you feel the right thing to do, you just know it and it is relatively easy in most circumstances.

So what about this environment? How familiar are you with the cross-currents among markets (and therefore among different type of market participants)? If you are trading an equity index, do you realize the value of knowing what the other equity indices are doing? The value of knowing what the cash market is doing?

Furthermore, do you know why knowing these things is important?

At their core, markets are simply social systems in the social psychology sense of social systems. They are most certainly NOT just a bunch of computer generated numbers, patterns and inter-relationships. It is easy to forget that behind every single print in every single market is a human being - most of whom have studied the market extensively.

Instead of trying to always outsmart them, try thinking in terms of "they know just as much as I do so does this decision make sense"? (OK that almost gets into the old economist joke about a $20 bill lying on the ground can't be there because some one would have picked it up but...) Realizing that your competition knows as much as you do and systematically assuming that they do is a great strategy and risk management tool.

And isn't that what every market, investing or trading decision is about - a strategy combined with the right risk management?

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