One trader I work with told me, “If I was more confident, I would be a good trader.” In response, I asked: “What do you think would make you more confident?” She said, “Make more profitable trades.”
Unfortunately, this is not the correct answer. She thinks her results will bring her the confidence she is looking for. Most aspiring traders think so.
Where True Trading Confidence Comes From
Developing sustainable confidence in your trading skills and abilities in real time does not come overnight. This is a process. And this is the process of “reaching the goal” that we focus on to improve and “be a good trader.” Confidence comes from mastering the various skills required to read the market, execute and manage trades. Mastering these skills and abilities is a trading process, and it is this process that inspires confidence. Confidence doesn’t really come from more profitable trades. In fact, more profitable trades are due to focused attention on the process.
How to Maintain Improvement and Build Confidence
The key to both building your confidence and maintaining the skills and abilities you’ve already developed is understanding how we learn. While we can certainly learn quickly, we cannot rush to learn. This is especially true of the multi-faceted skill set required in trading. Too often, I see traders try a strategy or indicator, take a loss or two, and discard that strategy like a hot potato. Again, their focus is on results. This wrong thinking will only upset you; continual improvement and true confidence will always be unattainable.
Learning is not linear. There is no straight line. We do not start at point A and gradually work towards point B. Instead, learning occurs in a series of ups, downs, and plateaus. This is very similar to an uptrend swing. We experience bursts of growth and development, retreat a little, move forward a little, and then rest for a while as we reach a new plateau where we consolidate what we have learned.
False-minded traders are thrilled with highs, depressed with lows, and bored with plateaus. Again, their focus is on results. How can you develop genuine confidence in these roller coasters?
Where You Can Really Build Confidence in Trading
Confidence is at a learning plateau where our accomplishments are consolidated and our abilities are stabilized. Confidence doesn’t show up in ups because that’s not our true skill level. The training did not have time to gain a foothold. The dips in our learning curve are not places to get scared or depressed. Falls are to be applauded. Why? Because this is where we learn what else we need to get better. Where else could we get this important information? And the plateau is not a place to get bored; they must be savored.