A Reading Between Medicine and Trading

Pain, in physiology as in financial markets, is not a dysfunction but a form of information: it is the signal that allows the system to evolve and preserve itself.

In everyday language, pain is perceived as an enemy to be fought. It is something that disturbs, limits and makes us wish it were not there. However, in biology and medicine, pain is not a defect of the nervous system, but one of its most refined functions: an alarm signal that is essential for survival.
Proof of this is a rare genetic condition, CIPA (Congenital Insensitivity to Pain with Anhidrosis), in which the subject is born unable to feel pain or sweat. The absence of this sensory function does not produce well-being, but vulnerability. Burns, wounds or fractures are not felt, and the lack of a defensive response often leads to irreversible damage.

Pain, therefore, is not a dysfunction: it is a regulatory function. It is a language through which the body communicates to itself that something is out of balance. Eliminating this function is equivalent to interrupting the information channel that allows for self-preservation.

The parallel with trading

Trading also has its own system of “sensory nerves”. The trader’s pain manifests itself in the form of loss: economic, emotional or cognitive. It is a signal indicating a deviation from the plan, a break in the balance between risk and return, an error in interpreting the context.
However, as in physiology, many try to anaesthetise the pain. They seek systems that never lose, strategies immune to uncertainty, models that promise continuous profit and no error. In market language, this is equivalent to a pain insensitivity syndrome: a system that no longer feels risk and is therefore unable to defend itself.

The result is always the same: the illusion of security precedes disintegration.
An overly optimised algorithm, an excessively filtered portfolio, and risk management that demands the impossible end up isolating the trader from contact with the dynamic reality of the market. When this changes – because it always changes – the system, lacking feedback, collapses.

Pain as informative feedback

In physiology, the absence of pain compromises homeostasis¹. In trading, denial of loss compromises adaptation.
Moderate losses, like controlled pain stimuli, have an informative function: they signal limits, indicate thresholds, and teach where exposure is excessive or inefficient. A system that integrates pain into its decision-making architecture is a system that evolves; conversely, a system that attempts to eliminate it becomes fragile, lacking redundancy and incapable of learning.

Neuroscience confirms the depth of this parallelism. The brain processes physical and emotional pain through partially overlapping circuits that are activated in response to both injury and financial loss.
This means that the experience of a loss in trading is not only cognitive but also neurophysiological: it alters the perception of risk and changes the decision-making process.

Traders who try to “not feel” – suppressing fear, frustration or discomfort – do not become more lucid, but more blind. Emotional desensitisation reduces the ability to perceive danger signals and amplifies the risk of systematic errors.
Like an organism that ignores pain, they continue to act even when the system shows signs of imbalance.
Feeling pain, understanding it and modulating it therefore becomes a necessary condition for preserving balance — biological in the body, cognitive in the markets.

Pain as an adaptive function

Pain, in the body as in trading, must be measured, not eliminated.
In modern medicine, the goal is not to abolish pain, but to modulate it: reducing it when it is useless or chronic, but preserving it when it has diagnostic value.
Similarly, in trading, pain must be regulated, not erased. Thresholds must be established – the maximum acceptable drawdown, the loss beyond which the system is revised – to maintain information without falling into operational self-harm.

A mature trading system incorporates pain as a functional variable:

• it does not suffer it;
• it does not deny it;
• it interprets it to update its structure.

A loss, when it is part of a solid structure, is not a mistake. It is a breath. A phase of the pulse. An evolutionary response. Without it, there is no adaptation. And without adaptation, no system survives.

¹ It is the natural tendency to maintain a relative state of internal equilibrium in the chemical and physical properties of any living organism. Homeostatic mechanisms in human physiology are necessary for the maintenance of life because they allow certain parameters of the organism to be kept within acceptable limits even when external conditions vary, through precise self-regulating mechanisms.

References

Nagasako, E. M., Oaklander, A. L., & Dworkin, R. H. (2003): Congenital insensitivity to pain.

Basbaum, A. I., & Julius, D. (2006): Toward better pain control.

Leknes, S., & Tracey, I. (2008): A common neurobiology for pain and pleasure.