Trading is a Personal Game of Risk/Reward

Trading is a game of risk/reward, just like life itself. Once we accept that, it will become easier to approach. Look, when I decided to make the change to quit my “safe” job to entirely focus on trading, I seemed crazy through the eyes of many. But it was all about risk/reward.

Let me explain it further. The risk/reward game means finding an imbalance between the two in order to decide what to do. It looks relatively easy but it actually is pretty tough. Each one of us knows how difficult it is to execute in the direction of a change, especially when the change is so drastic we have to sacrifice comforts.  You have to start a new challenge from scratch.

The main point is that what we decide to put on that balance is very personal. No one other than ourselves would be able to know what elements to consider and how much weight each one of these has into the decision-making process. To me, the fact that I wasn’t happy anymore working as an engineer for automotive was much more than the consequences of not having a guaranteed steady income.

In the end, the risk of living an unhappy life was so encroaching that I really felt I could have invested my time into something I was truly passionate about. At that time, I’ve factored in the risk that it would have taken me years before I could gain the same income that I was making in my previous 9 to 5 job. Now, I couldn’t be happier that I had decided to go all in.  

The Worst-Case Scenario Perspective

A great method I use is putting myself into the worst-case scenario perspective. Even though I was prepared to put my best effort into making this trading journey a success, I had to take into account the option of a failure. In fact, it is totally normal to fear the uncertain because fear is the greatest tool we use daily to keep us alive.

So, a complete failure in my case would have meant to lose all my hard-earned money collected over the previous working years. This one scenario could have discouraged the vast majority of people but still, it wasn’t an argument strong enough to keep me from giving up the dream of freedom that traders experience.

I was willing to start fresh again. Over the years, I’ve learned to trust my instinct because I’ve paid the price of working for somebody else’s dream or, even worse, living somebody else’s life. Why am I sharing this with you? Because that’s the attitude that wins in the long run.  I truly hope it can inspire some of you to pursue your own desires.

So, let me finish this article with a practical suggestion related to trading. Next time you plan a trade, make sure the risk/reward ratio is really on point, otherwise have the courage of take a step back and wait for the next opportunity. Because there is nothing wrong with sitting tight. A great trader doesn’t need many trades to be successful.

“The biggest risk is not taking any risk. In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks.” – Mark Zuckerberg

See you in the chat room.

Trade safe,

Roberto Barbaro