How to deal with Overconfidence: The worst mistake you can make?

J

jinxu

Has anyone here ever figure out how to strike a balance between overconfidence in trading and in your personal life?

My experience has been that overconfidence in trading lead to more risk taking and more mistakes. And paradoxically, my best trading has mostly came down to when I was feeling less confidence that lead to more focus. Like when you're down and your confidence is shaken but it gives you more focus because it makes you work harder.

However, the problem is for your personal life overconfidence is good. less confidence is bad. But want to have that overconfidence in my personal life without it spilling over to trading. For example: overconfidence is good with women. But bad with trading.

So how do I deal and find a balance?

Can anyone relate?
 
Greetings J,

Not being a “Shrink”, I cannot offer up a professional opinion. However, having had my share of “moments ”in the past, I believe I can relate to you as one Trader to another.

From what I understand of the topic, I believe that what you are calling "Overconfidence" is what Mark Douglas describes in his book; “Trading in the Zone” as “Euphoria”. Let me cite a paragraph from page 50 in the book to see if you can relate to what he has stated:

“Euphoria and self-sabotage are two powerful psychological forces that will have an extremely negative effect on your bottom line. But, they are not forces you have to concern yourself with until you start winning, or start winning on a consistent basis, and that's a big problem. When you're winning, you are least likely to concern yourself anything that might be a potential problem, especially something feels as good as euphoria. One of the primary characteristics of euphoria is that it creates a sense of supreme confidence where the possibility of anything going wrong is virtually inconceivable. Conversely, errors that result from self-sabotage have their root in any number of conflicts that traders have about deserving the money or deserving to win.

It's when you're winning that you're are most susceptible to making a mistake, overtrading, putting on too large a position, violating your rules, or generally operating as if no prudent boundaries of your behavior are necessary. You may even go to the extreme of thinking you are the market. However, the market rarely agrees, and when it disagrees, you'll get hurt. The loss and the emotional pain are usually significant. You will experience a boom, followed by the inevitable bust.”

You might want to take a look at this entire chapter to see if you can make better sense of your personal dilemma.

Hope this helps.

KDASFTG
 
Quote from KDASFTG:


“Euphoria and self-sabotage are two powerful psychological forces that will have an extremely negative effect on your bottom line. But, they are not forces you have to concern yourself with until you start winning, or start winning on a consistent basis, and that's a big problem. When you're winning, you are least likely to concern yourself anything that might be a potential problem, especially something feels as good as euphoria. One of the primary characteristics of euphoria is that it creates a sense of supreme confidence where the possibility of anything going wrong is virtually inconceivable. Conversely, errors that result from self-sabotage have their root in any number of conflicts that traders have about deserving the money or deserving to win.
It's when you're winning that you're are most susceptible to making a mistake, overtrading, putting on too large a position, violating your rules, or generally operating as if no prudent boundaries of your behavior are necessary. You may even go to the extreme of thinking you are the market. However, the market rarely agrees, and when it disagrees, you'll get hurt. The loss and the emotional pain are usually significant. You will experience a boom, followed by the inevitable bust.”
More...
Yep. That's pretty much is. Usually, I win then the next day I feel like I can take more risks so I do and then end up getting hurt. Often time I have to try to keep it under control. It's hard. In order to keep winning I have to keep myself in a state thinking that I can lose it all in any given moment.
 
Quote from jinxu:

Yep. That's pretty much is. Usually, I win then the next day I feel like I can take more risks so I do and then end up getting hurt. Often time I have to try to keep it under control. It's hard. In order to keep winning I have to keep myself in a state thinking that I can lose it all in any given moment.
More...

Here's my favorite advice regarding this:

Quote from Pa(b)st Prime:

Being disciplined in the past isn't good enough: on each and every trade you must be disciplined. Forever. Like a drunk in a program you can NEVER slip off the wagon. Easier said than done.
More...
 
Quote from jinxu:

I'm not sure I understand why you needed to act hostile???

:confused:
More...

Any interpretation of hostility - is your issue

I'm being matter of fact (blunt if you prefer)


RN
 
You must log in or register to reply here.
Back
Top