Nick Goold
Successful people from all walks of life have confidence in their own skills and judgement and act out their decisions without wavering when faced with unexpected situations or difficulties.
It's the same with trading.
Successful traders have confidence in their trading plans and their execution skills. That allows them to stay calm under pressure and follow their trading plan.
So how do successful traders develop their confidence?
Actually, they have all grown their confidence by strictly following their own trading plan. As you follow a trading plan and build confidence in it, you will actually follow your trading plan even more faithfully, which means you gain even more confidence. That allows successful traders to trade safely in any market, protecting their account value.
Confidence also allows you to minimise trading losses when markets are tricky to trade and to adapt your trading strategy to any changes in the market.
Step 1: Success takes time
The most important part of the challenge of becoming a profitable trader is to remain confident, even when losses occur. However, this can be a real challenge. Many traders lose confidence after losing money and begin to doubt their trading plan. It's easy to lose faith in your trading plan, especially when losses continue.
To have faith in and believe in your trading plan, you need to spend considerable time through trial and error to make it adaptable to the market. It's impossible to develop a good trade plan from the start.
If it takes time to become confident in your trading plan, it means it takes time to become a confident trader. Because the steps to profitable trading are unique for each trader, naturally, the time it takes to gain confidence will differ.
Step 2: Focus on the trading process
To consistently profit from your trades, you must establish a trading process. The trading process is a series of measures that include trade preparation, execution, recording and reflection (improvement).
It can abbreviate to the PDCA (Plan, Do, Check, Action) of trading.
It's no exaggeration to say that trading success is impossible without a trading process.
It takes time to become consistently profitable, but once you have built a process and are able to put it into practice, you will gain a great deal of confidence.
Building a process lets you focus on making good decisions, rather than worrying about losses.
Step 3: Become an expert on selected markets and strategies
There are many types of markets and many opportunities in each market.
However, you shouldn't think you can handle all markets and take advantage of every opportunity. To be successful you need to select the markets you want to trade and become an expert in those markets.
The deeper you understand your chosen markets and strategies that work in those markets, the better your chances of success. Trading the same techniques over time will also increase your knowledge and confidence.
Experts can quickly adapt their trades to the market when the market changes. They know how to trade in these situations, no matter how the market changes.
Step 4: Separate your personal life from the results of your trades
Controlling emotions is essential to developing self-confidence. If you get too unsettled after a loss, it can have a negative impact on your subsequent trades. Conversely, if you become too excited when you make a profit, that can negatively impact your next trade.
If you find your emotions are affecting your private life, try to detach from them when trading, and take breaks when you feel the need and control your emotions.
Understand that losses are a normal and natural part of trading.
When it's not going so well, break off from trading when conducting your personal life and maintain good relationships with family and friends.
Focus 100% on the market when trading, but once trading is over and you've finished your review, switch your mind back to your personal life and focus 100% on your personal life.
Step 5: Enjoy the challenge of trading
Every trader has good days and bad days. Sometimes you have a string of good days, but sometimes you have a run of bad days. It's the same as at work or in your personal life.
However, if you enjoy trading no matter the situation, you are less likely to be dominated by negative emotions, even in bad times, and you will retain confidence.
Trading is a test of your skills and ability to maintain discipline. Enjoy the challenge of becoming a successful trader, something only a select number of people can reach.
