Is It Possible to Become Overconfident?

[Jay McKean 10]

Over confidence can be damaging to the trader as much as lack of confidence in executing trades. Any emotional extreme is an unwelcome quality in a winner’s mindset. After making a great winning streak there is a tendency for many traders to become complacement, cocky and careless. When a trading system is working well there can be a natural human inclination towards the feeling of infallibility. The trader can be impaired and start trading on gut feeling. This is not a good sign of trading like a professional and usually results in damaging accounts and mindset. Many traders build up accounts only to give it all back to the market. What are the symptoms of overconfidence?

 

Willingness to take larger risks.

Staking a much larger position in one market.

Risking more than usual across multiple markets.

Not adhering to trading plan.

Willingness to ride losses longer than usual.

Maybe I’ll jut take a chance attitude.

Not taking profits at predetermined objectives.

Feeling of the best is yet to come.

[SIUYA 11]

a guy in an office I used to work in used to stand up with raised arms when a big trade went his way - after a while he forced us/begged us to make him close all his positions when he did this - he knew his overconfidence would cause him losses in the near future and history showed his exuberance was a clear sign losses were coming......so it was stop, close positions. step back and breathe again.

 

and yet.....there is an argument for trading bigger as you become more confident and are seeing the swings in the market clearly.

I guess there is that fine line between confidence and cockiness, and it manifests itself in a variety of ways and is different for different people. Just another thing to test us

[TheNegotiator 13]

Imo, there is no such thing as "overconfidence". Confidence is belief in rational understanding of a situation. So overconfidence would fall into the category of the irrational and thereby render it as non-existent. What I see is confidence and arrogance. Rational and irrational. I believe this helps in defining when you may be about to come off the rails so to speak, in that it is easier to define rational and irrational than whether the degree of confidence you have in something is too much or too little.

Edited July 28, 2011 by TheNegotiator

[phantom 16]

1 Willingness to take larger risks.

2 Staking a much larger position in one market.

3 Risking more than usual across multiple markets.

4 Not adhering to trading plan.

5 Willingness to ride losses longer than usual.

6 Maybe I’ll jut take a chance attitude.

7 Not taking profits at predetermined objectives.

8 Feeling of the best is yet to come.

 

 

Aren't 1, 2, 3, and 5 the same thing?

 

 

Phantom

[Tams 20]

Over confidence can be damaging to the trader as much as lack of confidence in executing trades. Any emotional extreme is an unwelcome quality in a winner’s mindset. After making a great winning streak there is a tendency for many traders to become complacement, cocky and careless. When a trading system is working well there can be a natural human inclination towards the feeling of infallibility. The trader can be impaired and start trading on gut feeling. This is not a good sign of trading like a professional and usually results in damaging accounts and mindset. Many traders build up accounts only to give it all back to the market. What are the symptoms of overconfidence?

 

Willingness to take larger risks.

Staking a much larger position in one market.

Risking more than usual across multiple markets.

Not adhering to trading plan.

Willingness to ride losses longer than usual.

Maybe I’ll jut take a chance attitude.

Not taking profits at predetermined objectives.

Feeling of the best is yet to come.

 

you don't have to worry about becoming overconfident

you never have to worry about becoming overconfident

the market has a way to humble overconfident traders

[ahimsa 10]

you don't have to worry about becoming overconfident

you never have to worry about becoming overconfident

the market has a way to humble overconfident traders

 

hi,tams do you mean,that the market has a way to humble the overconfident traders,if they don't respect it?or the market give a lesson if the traders become overconfident because too much sure of their success,and gain ?thanks in advance.

 

ahimsa

[Tams 20]

hi,tams do you mean,that the market has a way to humble the overconfident traders,if they don't respect it?

 

or the market give a lesson if the traders become overconfident because too much sure of their success,and gain ?thanks in advance.

 

ahimsa

 

aren't you talking about the same thing?

[ahimsa 10]

aren't you talking about the same thing?

 

 

I don't know,i'm not so sure maybe its possible that my question is misrepresent.i mean that for me when we start we are more sure,after some gain and sure to had found a good strategy,for a profitable trade, it's inevitable that we loss,after the first loss we start to become insecure, and here the market don't gave to us a lesson,but are us that start to learn to take some confidence with market.When the traders move against the market opening a position without reflect or against trend,start to operate with a bit of arrogance,and here for me that the market punishing the traders.if only we'll have the same cold to operating of when we read a chart after the close,i think that we'll must all millionaire.maybe i can think that after some time,overconfident loss and insecure gain...maybe...if don't take the place too much fear to open position.and loss money.

[Patuca 13]

you don't have to worry about becoming overconfident

you never have to worry about becoming overconfident

the market has a way to humble overconfident traders

 

Hogwash. The market doesn't know nor care if you are rich or poor, humble or overconfident, arrogant or just plain stupid. The market is the market and the market is simply going to do whatever the market does. That said, overconfidence is an attitude that will open the door for you to shoot yourself in the foot. You will be prone to mistakes that you otherwise wouldn't make. You better worry about being overconfident. You better worry about being poor. You better worry about being arrogant. You better worry about being stupid. You better become a worry wart. Bigtime.

 

Remember the case of the man who said.."I wrote a book called..Humility and how I obtained it"......

 

When I say "you" I am talking about any of us and not anyone in particular.