Why pessimism pays off in trading

[analyst75]

The advice I’m about to share may seem counterintuitive.

 

But being pessimistic really does make you a better trader.

 

Let me explain…

 

Think about the time when you took a setup that met all the criteria of your trading plan.

 

It was such an A+ setup that you were certain it would hit your profit target.

 

And after calculating the risk-to-reward ratio…

 

You were just waiting to see that extra 3.5% in your account balance.

 

But no…

 

The market ended up reversing on you and started racing towards your stop loss.

 

All certainty and optimism you felt were replaced with a fear of losing.

 

And by the time you were stopped out, you likely felt a mix of disappointment and frustration.

 

Which you ended up carrying with you for the next trade you took…

 

Sound familiar?

 

Well, this is the danger of being optimistic about your trades.

 

You become so tied to the outcome that you experience an emotional rollercoaster when you’re trading.

 

And that’s why it pays to be pessimistic.

 

If you visualise your trade consolidating, retracing on you and even stopping you out…

 

You’ve already accepted the worst-case scenario in your mind.

 

So you can trade without any stress, anxiety or frustration.

 

And take your trading to a more professional level.

 

Of course, this is easier said than done….

Author: Charlie Burton

 
Source: https://www.charlieburtontrading.com/ 

[radex78]

In my opinion, traders need to be optimistic but not overconfident, optimistic that we have carried out analysis according to our abilities and knowledge, and plan trades that involve risk tolerance and the targets we want to achieve.

Optimism will lead traders to dare to take risks according to risk tolerance, but overconfidence can lead traders to be too brave to take higher risks with high optimism that they will achieve profits.