Tackle Today: The problem with overconfidence
January 23, 2020
≈ Underestimating the overestimation. ≈
We are all overconfident. All of us. Me too. You too. Wanna proof? Just ask your employees/co-workers how much they think they contribute, percentage-wise, to the overall success of the company. Ask here at Tackle Trading, for example, how much each one of us contributes to the company’s overall performance and then sum the results. I bet you will get 400% at the end. That’s an impossibility.
It’s just part of us, of who we are. When it comes to this type of assessment, no harm, no foul. But when it comes to trading, that can be disastrous.
Overconfident traders tend to leverage too much.
Overconfident traders tend to underestimate the importance of journaling.
Overconfident traders tend to underestimate the importance of a trading system.
Overconfident traders tend to overestimate their capacity to forecast market movements.
Overconfident traders tend to overestimate their capacity to forecast outcomes from binary events and prices reaction to them.
Overconfident traders tend to have mental stop losses.
Overconfident traders trust their linear thoughts in an exponential world.
Overconfident traders tend to think they are experts in some topics regarding the financial markets.
Overconfident traders tend to think they have unmatched, unrivaled, and infallible chart reading capabilities.
Overconfident traders tend to use the words “never” and “always” more than they should.
Overconfident traders tend to invert the 2 ears/1 mouth proportion: talking too much and not listening enough.
#
Overconfidence kills trading.
If you are overconfident to the point of jeopardizing your business, the solution is simple:
- Try to fit all your little pieces of overconfidence into 100%.
- Acknowledge the fact that you can be wrong and carry protections against your own convictions.
- Learning to trade, if plotted on a graph, assumes a V-shape form. The more you know, the more there is to know.
Chart of the Day
Any Resemblance is Purely Coincidental
Video of the day
Why you should use Trading Journals
Coach Tim shows exactly where to find the Tackle Trading Journals and what to use them for.
Traders Lounge 11 PM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
Cashflow Club 8:30 PM EST
Held every Thursday before Friday’s option contract expirations, this show helps you perfect your favorite cashflow strategies.
Halftime Report 12:30 PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.
Financial freedom is a journey
The Tackle Today series is brought to you by Tackle Trading.
Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.
# Sign up now for a 15-DAY FREE TRIAL #
Legal Disclaimer
Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.
All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.
