Overconfidence in Trading: How To Stay Grounded During a Winning Streak?
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In a market where you can go from hero to zero in the blink of an eye, navigating the fine line between confidence and overconfidence is an art that traders must master.
Riding a winning streak is exciting; it confirms your edge and trading skills. But as those wins start stacking up, adrenaline spikes, and you enter a danger zone – the terrain of overconfidence.
The appeal of success leads traders into a mental trap where they start to believe they have gained powers they never had in the first place - the ability to predict the market and control outcomes.
To avoid this trap, traders must understand their overconfidence patterns. Only then can they take steps to regain their focus and avoid giving back their hard-earned profits to the market.
In this edition, we'll delve into the science behind overconfidence, exploring its connections to testosterone and the disposition effect, and give you 4-key questions to stay grounded in the face of a winning streak.