In life, being optimistic is an important trait that every person should have… but not in trading. In this episode of 2Traders Podcast, Walter and Darren dig into the topic about Optimism Bias and how this can be dangerous to a trader. Walter stresses out how important it is to consider certain factors first and anticipate what you want to happen with your trade rather than just make drastic decisions based on how the market is doing at the present.

Also, Darren shares some useful tips on how to avoid the optimism bias and how a simple note can save you.

http://media.blubrry.com/2traders/content.blubrry.com/2traders/2Traders_-_EP39_Optimism_Bias.mp3

Download (Duration: 25:08 / 28.7 MB)

In this episode:

01:02 – what draws people to trading?

02:36 – black swan events

04:26 – it needs a structure

06:00 – acceptable behavior

08:26 – take the punches

10:07 – really tiny account

11:31 – what the successful people do?

12:22 – how we start to trade doesn’t help

14:16 – a combination of things

17:25 – always tweaking it

19:48 – other elements

20:56 – core idea

22:12 – key to success

23:34 – make some notes

Tweetables:

You have to learn to be wrong and you have to learn to let go. [Click To Tweet].

Do I really have to take this trade?[Click To Tweet].

A strategy doesn’t necessarily have to have an edge, just a structure. [Click To Tweet].

Download The Full Episode 39 Transcript Here

Walter: The real danger of optimism bias is it takes our eyes out of the ball. To me, trading is really all about risk management. If you don’t understand that, it will just be an expensive lesson.

Announcer: Two traders, Darren and Walter, pull back the curtain on profitable trading systems, consistent money management, and profitable psychological triggers. Welcome to the Two Traders Podcast.

Walter: Welcome back to the Two Traders Podcast. Walter here and I’ve got Darren over there.

Darren: Hi, Walter.

Walter: Well, Darren, we’re going to talk today about this idea of the optimism bias. This is something that, to me, applies to traders. Obviously, as traders, one of the reasons why we get into this is because we focus a whole lot on what can happen. What you want to happen.

You want to make this pile of money. You want to have some freedom. Usually, those are what draws people to trading. You can get paid for taking risk instead of getting paid for offering your hours to a company or a boss or somebody. Even as a consultant, you’re really offering your time, in most cases.

In this case, you get paid by taking risks. That’s really what trading boils down to. A lot of traders are pretty optimistic. This can get a lot of traders in trouble because, as we know,