WHAT IS THE BEST TRADER MINDSET?

3月31日

Optimism, pessimism and realism which trader's mindset is better? The answer seems obvious: optimism. Optimistic traders overestimate their strength and the situation, pessimists do not believe in their strength, so the best is common sense realism. The realistic version of the world perception implies assumption of both favorable and unfavorable variants of the event outcome. But on the other hand, realist traders miss the opportunities that optimists see and underestimate the risks. All three types of trader's thinking have their own strengths and weaknesses.

WHICH TYPE OF TRADER'S MINDSET IS THE MOST PRODUCTIVE?

1. Optimism
"Think positive", "Set yourself up only for success" such motivational mottos are in every trading book. An optimistic attitude has many advantages:

• Optimist traders are better motivated. They believe in success, so they set the bar higher.
  
• Optimist traders are better at dealing with negative emotions.
  
• Optimist traders are more confident in their abilities.
  
• Optimist traders' brains are programmed in advance for a positive outcome.
  

All of this is good as long as it is within the bounds of common sense. And often the boundary between common sense and unhealthy thinking of a trader is not visible. And as soon as optimism crosses the boundaries of adequacy, problems begin:

• Ignoring danger. Imagine a person who confidently drives through a red light, thinking that nothing will happen to him. The only thing left to do is to convince other drivers of this.
  
• Overestimating possibilities. The set goals turn out to be unattainable. And trying to achieve them leads to burnout.
  
• Denial of the need to solve problems. The optimist believes in the best, but problems do not go anywhere. And someday their volume will become critical.

Everything is good in moderation. An optimist is inclined to work harder, but he is also inclined to take unreasonable risks.



2. Pessimism
The strength of pessimism is the ability to assess risks and minimize them. Pessimist traders are more cautious. They try to double-check everything 10 times, so they are less likely to take risky actions. However, they also earn less. A pessimist trader tries to diversify risks, thinks through several ways of retreat. Pessimism goes to the extreme, when a trader thinks that everything is bad and it will be even worse in the future. They blame others for failures, as they cannot find the strength to admit his mistakes. They have no motivation; they live in constant expectation.


3. Realism
The sweet spot? Not a fact. The realist trader does have a sober assessment of the risks without going overboard. But they also have extremes:

• Fatalism. While optimistic traders believe in the best, realists follow the path of pessimistic traders. They accept reality, believing that this is fate. Realist traders do not fall into stress, but do not believe that the situation can be changed for the better.
  
• Pragmatism. Realist traders think that a bird in the hand is worth two in the bush. They effectively solve current problems, but trying to look at something bigger is out of the question.
  
• Rationalism. Algorithmic, schematic thinking of the trader is manifested in other aspects of life.
  

Which type of trader's mindset is the most productive? All three types in one trader, from which the best is taken. Moderate optimism in achieving goals, moderate pessimism in assessing risks, moderate realism in building a system. And extremes are best avoided.


In conclusion, each of these traits has its strengths and weaknesses, but when combined in moderation, they can create a well-rounded approach to trading. Optimism provides motivation, confidence, and a positive outlook, which can help traders set higher goals and persevere through challenges. Pessimism, on the other hand, can help traders assess and minimize risks, promoting caution and careful decision-making. Realism offers a sober assessment of situations and helps traders develop practical solutions to problems. Ultimately, the most constructive trader's mindset is one that leverages the strengths of each of these traits while avoiding their extremes. When you lose a trade, don't think too negatively. When you win, try not to get euphoric. Extreme emotional swings will push you into the abyss. Therefore, the most constructive trader's mindset is a balanced combination of optimism, pessimism, and realism.

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