In a good book "Risk-Reward", the author Howard Abell distinguishes between the traits of gamblers and calculated risk-takers.
"More than ever you need to understand the difference between a gamble, which has a high probability of loss, and a calculated risk, which has a much higher probability of a positive outcome. Here are the traits and tendencies of gamblers from calculated risk takers. The following lists contrast the two groups.
The gambler
Motivation derived form desire for excitement and danger
Crowd driven
Highly emotional
Blames others or luck for bad outcomes
Lingers over losing choices and wins not taken
Is influenced by unacknowledged fantasies to what is possible
Will risk more than can afford to lose
Acts on impulsive decisions
Is unaware of unconscious motivation
Acts out of sense of superiority or "magical thinking"
Gets high and feels powerful on a win, gets low and feels worthless and small on a loss
Infuses ego into risk choices
Lacks discipline and invests on wishful fantasy rather than recognizing reality
Hides losses and is secretive about taking chances
Procrastinates (building up excitement levels)
Follows a favorite method no longer useful or relevant
When losing will take increasingly bigger risks to catch up
Looks for the one big win or score that will result in bliss
The calculated risk taker
Contains and manages emotion
Is aware of irrational factors swaying a crowd
Takes responsibly for results
Does not waste time with what might have been
Acknowledges personal fantasies and resolves or disregards them
Risks a tiny fraction of equity on any individual choice
Concentrates on a realistic long-term strategy
Knows personal abilities and limitations
Is hardworking and open to new ideas
Stays emotionally even during wins and losses
Easily resists risk that do not fit within defined risk limitations
Is open about risk taking
Proceeds in a serious, conscious manner
Stays alert to present trends
Follows predetermined guidelines of safety
Analyzes situation, observes own reactions, and makes realistic plans
The following list represents the market behaviors that prevent most traders from achieving the results they desire in the marketplace. How many of these 10 are you struggling to overcome?
Not defining a loss
Getting locked into a belief or magical thinking
Losing control of a trade or opportunity
Emotional trading or investing
Hesitating or procrastinating about a market opportunity
Loss of focus
Being more invested in being right than in having a successful outcome
Not consistently applying your trading system
Not having a well-defined money management system
Not being in the right state of mind"
http://www.go2cio.com/chetan/gamblers.htm
"More than ever you need to understand the difference between a gamble, which has a high probability of loss, and a calculated risk, which has a much higher probability of a positive outcome. Here are the traits and tendencies of gamblers from calculated risk takers. The following lists contrast the two groups.
The gambler
Motivation derived form desire for excitement and danger
Crowd driven
Highly emotional
Blames others or luck for bad outcomes
Lingers over losing choices and wins not taken
Is influenced by unacknowledged fantasies to what is possible
Will risk more than can afford to lose
Acts on impulsive decisions
Is unaware of unconscious motivation
Acts out of sense of superiority or "magical thinking"
Gets high and feels powerful on a win, gets low and feels worthless and small on a loss
Infuses ego into risk choices
Lacks discipline and invests on wishful fantasy rather than recognizing reality
Hides losses and is secretive about taking chances
Procrastinates (building up excitement levels)
Follows a favorite method no longer useful or relevant
When losing will take increasingly bigger risks to catch up
Looks for the one big win or score that will result in bliss
The calculated risk taker
Contains and manages emotion
Is aware of irrational factors swaying a crowd
Takes responsibly for results
Does not waste time with what might have been
Acknowledges personal fantasies and resolves or disregards them
Risks a tiny fraction of equity on any individual choice
Concentrates on a realistic long-term strategy
Knows personal abilities and limitations
Is hardworking and open to new ideas
Stays emotionally even during wins and losses
Easily resists risk that do not fit within defined risk limitations
Is open about risk taking
Proceeds in a serious, conscious manner
Stays alert to present trends
Follows predetermined guidelines of safety
Analyzes situation, observes own reactions, and makes realistic plans
The following list represents the market behaviors that prevent most traders from achieving the results they desire in the marketplace. How many of these 10 are you struggling to overcome?
Not defining a loss
Getting locked into a belief or magical thinking
Losing control of a trade or opportunity
Emotional trading or investing
Hesitating or procrastinating about a market opportunity
Loss of focus
Being more invested in being right than in having a successful outcome
Not consistently applying your trading system
Not having a well-defined money management system
Not being in the right state of mind"
http://www.go2cio.com/chetan/gamblers.htm
