The recipe for success for a trader is to be able to constantly seek out new opportunities for making profits and one of the ideal ingredients is to be an eternal optimist. The winning trader is the one who can see that they are certain there is something to be found, so are able to start again if one of their trades fails to deliver a profit.
They keep enduring setbacks and market changes with a constant sense of optimism that they are just one trade from success and that they will find it. However there is a downside to such optimism as traders are often accused of being unrealistic optimists as they believe that the markets are just waiting to give them huge profits and great wealth, and that they can beat the market.
A very rose-tinted perspective of trading is the reality that to make money, you have to risk money and often times you will lose money. So is it that the optimistic trader is creating a protective barrier against the anxiety and stresses that risking your money can provoke? Is it possible that a trader can be too optimistic? What of optimism that is built around unrealistic expectations, will that really help make a winning trader?
Psychologists have completed studies that looked at the risks of being an unrealistic optimist by identifying the issues created by defensive and inflexible optimism. The experiment was built around the ability to estimate the odds of an adverse result of an event that had a probability that was relatively easy to calculate.
The result was a clear divide between the realistic and unrealistic optimists. The former were able to remain detached enough to see issues and barriers and make a sound judgment. In contrast the unrealistic optimists were so focused on the outcome that their thinking was clouded and not detailed enough to make an accurate assessment. Moreover they failed to ensure they had anything to assist in the event of an adverse event occurring.
As the markets apparently start to rally again and there seems to be more opportunity being created, there is plenty of room for the optimistic trader. However successful trading is all about looking for the high probability trade and the current environment still holds many volatile movements that can change things dramatically, often only temporarily.
The unrealistically optimistic trader won’t have put in place the protection needed to weather the blips. The winning trader will have been positive about all the opportunities that are around but will temper it to ensure that they have a contingency for adverse events, an exit strategy that accounts for the unexpected. Their optimism isn’t dented, it’s just that their thinking isn’t clouded and their plans remain flexible. Essential ingredients for success.
If you like this post, can you do me a favour and click the ‘Like’ and ‘Share’ buttons to spread the message and help others!