Skillsfirst Level 5 Diploma in Financial Trading (RQF) - Module 4 - Technical Analysis
Skillsfirst Level 5 Diploma in Financial Trading (RQF) - Module 5 - Psychology
Skillsfirst Level 5 Diploma in Financial Trading (RQF) - Module 6 - Risk and Money Management
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OPTIMISM VS. PESSIMISM

What do National League baseball teams that rally to win late-inning games have in common with highly productive workers? According to Martin Seligman, president of the American Psychological Association, professor of psychology at the University of Pennsylvania, and author of “Learned Optimism: How to Change Your Mind and Your Life” (Pocket Books, 1990), the answer is, quite a lot.

While studying the performance of players and managers in Major League Baseball, and of players and coaches in the National Basketball Association, Seligman found a remarkable correlation: Optimistic teams — as measured by how they talk about their performance in the sports press — play better under pressure than do pessimistic teams. For Seligman, the finding marked a new way to think about competition, work, and life. “For my whole life, the field of psychology has concentrated on correcting what’s wrong,” says Seligman. “But rather than trying to minimize what’s worst in life, we should maximize what’s best.”

Seligman developed the concept of “learned optimism” — and applied it directly to workplace productivity. “When pessimistic people run into obstacles in the workplace, in relationships, or in sports, they give up,” he says. “When optimistic people encounter obstacles, they try harder. They go the extra mile.”

What is Seligman’s advice on learning to be optimistic? Realize that when you react to adversity, you’re reacting not to an event but to how you feel about that event. You may not be able to control what happens to you — but you do have some control over your emotions. “When adversity strikes, how you think and what you believe determine how you feel and what you do,” he says.

Optimism in difficult situations, says Seligman, not only wins close ball games — it also helps people to grow in their careers. “How you handle adversity in the workplace tends to have much more impact on your career than how you handle the good stuff,” Seligman says. “The people who know how to overcome adversity are the ones who rise to the top of the organization.”

It does not take a genius to see that the way you think will help you become the successful online trader that you want to be. Therefore, it is important that you also focus on your solutions and not your problems. Dr Martin Seligman describes two kinds of explanatory styles that affect our behavior and performance these are: –

  • Pessimistic Explanatory Style – Feeling helpless
  • Optimistic Explanatory Style – Feeling self-empowerment

These styles have a lot to do with how we react, and talk to ourselves during events that occur. We are often unable to influence events, but we have the power to deal with them effectively, this is where positive psychology will be your ally – optimists will always win in the end.

When it comes to trade execution, remember that in the market, you are free to act or not. The markets cannot do anything to you that you do not allow, even if it is out of ignorance or a sense of powerlessness.

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