sound like a trick question, it is not.
The logical answer to the question is, unequivocally, yes. If I engage in an activity that is inherently
risky, then I must be a risktaker. This is a perfectly reasonable assumption for any trader to make. In
fact, not only do virtually all traders make this assumption, but most traders take pride in thinking of
themselves as risk-takers. The problem is that this assumption couldn't be further from the truth. Of
course, any trader is taking a risk when you put on a trade, but that doesn't mean that you are
correspondingly accepting that risk. In other words, all trades are risky because the outcomes are
probable—not guaranteed. But do most traders really believe they are taking a risk when they put on a
trade? Have they really accepted that the trade has a non-guaranteed, probable outcome? Furthermore,
have they fully accepted the possible consequences?
The answer is, unequivocally, no! Most traders have absolutely no concept of what it means to be a
risk-taker in the way a successful trader thinks about risk. The best traders not only take the risk, they
have also learned to accept and embrace that risk. There is a huge psychological gap between assuming
you are a risk-taker because you put on trades and fully accepting the risks inherent in each trade.
When you fully accept the risks, it will have profound implications on your bottom-line performance.
The best traders can put on a trade without the slightest bit of hesitation or conflict, and just as freely
and without hesitation or conflict, admit it isn't working. They can get out of the trade—even with a
loss—and doing so doesn't resonate the slightest bit of emotional discomfort. In other words, the risks
inherent in trading do not cause the best traders to lose their discipline, focus, or sense of confidence.
If you are unable to trade without the slightest bit of emotional discomfort (specifically, fear), then you
have not learned how to accept the risks inherent in trading. This is a big problem, because to whatever
degree you haven't accepted the risk, is the same degree to which you will avoid the risk. Trying to
avoid something that is unavoidable will have disastrous effects on your ability to trade successfully.
Learning to truly accept the risks in any endeavor can be difficult, but it is extremely difficult for
traders, especially considering what's at stake. What are we generally most afraid of (besides dying or
public speaking)? Certainly, losing money and being wrong both rank close to the top of the list.
Admitting we are wrong and losing money to boot can be extremely painful, and certainly something to
avoid. Yet as traders, we are confronted with these two possibilities virtually every moment we are in a
trade. Now, you might be saying to yourself, "Apart from the fact that it hurts so much, it's natural to
not want to be wrong and lose something; therefore, it's appropriate for me to do whatever I can to
avoid it." I agree with you. But it is also this natural tendency that makes trading (which looks like it
should be easy) extremely difficult.
Trading presents us with a fundamental paradox: How do we remain disciplined, focused, and
confident in the face of constant uncertainty? When you have learned how to "think" like a trader, that's
exactly what you'll be able to do. Learning how to redefine your trading activities in a way that allows
you to completely accept the risk is the key to thinking like a successful trader. Learning to accept the
risk is a trading skill—the most important skill you can learn. Yet it's rare that developing traders focus
sound like a trick question, it is not.
The logical answer to the question is, unequivocally, yes. If I engage in an activity that is inherently
risky, then I must be a risktaker. This is a perfectly reasonable assumption for any trader to make. In
fact, not only do virtually all traders make this assumption, but most traders take pride in thinking of
themselves as risk-takers. The problem is that this assumption couldn't be further from the truth. Of
course, any trader is taking a risk when you put on a trade, but that doesn't mean that you are
correspondingly accepting that risk. In other words, all trades are risky because the outcomes are
probable—not guaranteed. But do most traders really believe they are taking a risk when they put on a
trade? Have they really accepted that the trade has a non-guaranteed, probable outcome? Furthermore,
have they fully accepted the possible consequences?
The answer is, unequivocally, no! Most traders have absolutely no concept of what it means to be a
risk-taker in the way a successful trader thinks about risk. The best traders not only take the risk, they
have also learned to accept and embrace that risk. There is a huge psychological gap between assuming
you are a risk-taker because you put on trades and fully accepting the risks inherent in each trade.
When you fully accept the risks, it will have profound implications on your bottom-line performance.
The best traders can put on a trade without the slightest bit of hesitation or conflict, and just as freely
and without hesitation or conflict, admit it isn't working. They can get out of the trade—even with a
loss—and doing so doesn't resonate the slightest bit of emotional discomfort. In other words, the risks
inherent in trading do not cause the best traders to lose their discipline, focus, or sense of confidence.
If you are unable to trade without the slightest bit of emotional discomfort (specifically, fear), then you
have not learned how to accept the risks inherent in trading. This is a big problem, because to whatever
degree you haven't accepted the risk, is the same degree to which you will avoid the risk. Trying to
avoid something that is unavoidable will have disastrous effects on your ability to trade successfully.
Learning to truly accept the risks in any endeavor can be difficult, but it is extremely difficult for
traders, especially considering what's at stake. What are we generally most afraid of (besides dying or
public speaking)? Certainly, losing money and being wrong both rank close to the top of the list.
Admitting we are wrong and losing money to boot can be extremely painful, and certainly something to
avoid. Yet as traders, we are confronted with these two possibilities virtually every moment we are in a
trade. Now, you might be saying to yourself, "Apart from the fact that it hurts so much, it's natural to
not want to be wrong and lose something; therefore, it's appropriate for me to do whatever I can to
avoid it." I agree with you. But it is also this natural tendency that makes trading (which looks like it
should be easy) extremely difficult.
Trading presents us with a fundamental paradox: How do we remain disciplined, focused, and
confident in the face of constant uncertainty? When you have learned how to "think" like a trader, that's
exactly what you'll be able to do. Learning how to redefine your trading activities in a way that allows
you to completely accept the risk is the key to thinking like a successful trader. Learning to accept the
risk is a trading skill—the most important skill you can learn. Yet it's rare that developing traders focus
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