The Confident Trader
A trader who is confident has the ability to recognize his strengths and weaknesses and adjust to situations based on this knowledge. When others panic about drawdowns, he is comfortable paring down his position. This confident trader knows that the probabilities are high, if he sticks with his stragegy, that he will make the profits his testing predicted.
This confident trader recognizes that he will survive the fluctuations and unexpected events. He contingency plans as best as he can for the drama of the markets. When these situations happen, he knows to back off, risk less and waits for the markets to settle down before he returns to full throttle. When you are confident, you know that you will prevail, if you follow your plan
Contrast to confidence
An arrogant person does not consider that the markets are bigger than he is and does not want to admit when he is wrong. He fights himself and the markets and is very often not ready when conditions are better. His arrogance is a cover up for his vulnerability and inadequacy. This psychological issue is why so many traders fail.
How to develop confidence in trading
Develop confidence in life
You will fail in becoming a profitable trader if you have not developed confidence in yourself in other areas of your life. You must start out with:
- The ability to comprehend the markets
- Having the experience of being disciplined
- Knowing that you will sustain passion after hurdles
- Commitment and persistence
Before you start trading you must:
- Create a plan
- Develop a routine
- Have the time and energy to focus on trading
- Make time for stress reducing activities
- Know that what you have developed as a strategy works in simulation and that you can follow it
When you start to trade you must:
- Start off with only a few hours of real time trading per day
- Trade during non-volatile times
- Know your risk before every trade
- Only enter the markets after you have completed your checkoff list for recognizing a good trade
Get in the habit of keeping a trader diary for why you entered a trade and what you learned from each opportunity that you recognized and the ones you did not take
After you have traded full time (which could be only two hours a day):
- Notice the times that you were your weakest and strongest in performance
- Recognize where you must improve to earn more profits
- Seek help on improving your ability so you can improve your confidence
- Seek help on improving your confidence so you can improve your ability
Confidence in yourself is a key ingredient to becoming a successful trader. When you nurture confidence by building your skills and psychology, it will pay you dividends for a lifetime.
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Adrienne Toghraie coaches traders and investors to their next level of success by helping them overcome their self-imposed limitations. She has been a keynote speaker since 1989, author of 13 books, and owner of TradingOnTarget.com.
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