Confidence: One of the most sought after qualities in the world.
The majority of new traders list it as an issue for them. Not really surprising, is it?
Just how much of an issue it is though goes massively underestimated in my opinion. It’s a huge part of getting ahead in the pre-race trading game.
Let’s take a look at why that is and how you can get your trading confidence to compound…
Why Trading Confidence Is Number 1…
Long term readers may remember a trading fears post I published last year. Understanding them and boosting my trading confidence was a profound turning point in my trading some time ago.
In this post I really want to go deep on this topic, its something I’m passionate about and feel can really help readers.
So why is your own personal trading confidence level so important?
Because your confidence levels while trading are everything! They are the control mechanism, the safety catch and trigger all rolled into one.
I mean what’s the point in having a winning strategy, piles of information at your fingertips and a stack of trading capital if you’re going to start clicking like a lunatic and doubting yourself in the moment?
It just makes no sense. You need to be confident in what you’re doing…
Warning: It’s a Double-Edged Sword…
The first thing you should bear in mind; this trading confidence stuff – it works both ways.
I’ve spoken at length with some other really big traders about this, one of the biggest informs me he went through a bad patch that lasted months.
You see it’s not just about building up confidence to win, it’s protecting it to avoid a slump.
A simple way of explaining it would be to say; your confidence is a direct reflection of your recent results, right?
Like a short-term ‘confidence account’ if you like. The kicker being, when you’re confidence account is down on it’s knees it’s likely to show in results. Every result matters! Not just on a financial level but a confidence level too. You’re either gaining confidence or losing confidence, there is no in-between.
That’s great but…
How Can You Build Confidence?
Like anything confidence building is progressive, in trading it’s no different.
It doesn’t have to be a ‘hard-work’ style slog all the time though either. Being aware of your current trading confidence levels and getting into a few simple habits can make a big difference.
Bearing in mind that every trade has an impact on you is just the start, but an important one at that. When you start to realise that each negative trade takes a little away from that ‘confidence account’. You’ll start to be a little more cautious about your actions…
Failing to do so is like rolling a negative snowball, picking up more mistakes and losses on route. Neither you or I want that.
We want to do quite the opposite, drawing on good results, remembering them and congratulating yourself for doing the right thing. All the while avoiding those ‘confidence expenses’ as it were. You may find you’re trading slightly less, but so what?
Over-trading is often a common problem for newbies, it’s easy to see why when you look at things like this.
I think it’s really important to avoid any kind of limitation too. Hopefully you’ve seen this post about trading for a living before, but listening to others can be disastrous at times. Especially when it hit’s you where it hurts, straight in the confidence.
A more reliable resource would be something like Betfairs learning directory.
Also knowledge is powerful when it comes to the markets, don’t limit yourself there either! Read all that you can, learn about behaviours, market psychology and how the various systems in place affect trading conditions.
Look at it like this: Trading is like a boat on the ocean – you can invest in the skills and time to sail, or just go out and thrash about in the storm. Without knowledge and confidence in what you’re doing it becomes exactly that.
The more you research and learn, the more confident you’ll become. Once you practice this along with only working those situations where you know you have an above average chance, confidence will flourish.
And so the cycle goes on… much like a snowball rolling down hill.
However, beware of misplaced confidence too. The first time I first became truly confident in what I did this, the euphoric effect as it’s often referred to.
Getting over-excited and thinking you’re invincible in the markets will spoil the party eventually. You don’t want this to happen as it’ll be much like starting over again.
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Related Post: Top 4 Trading Fears – How to Deal With Them