One of the challenges of trading is that the market can reward you handsomely for bad trading behaviors, kick you badly when you trade well and everything in between.  Trading can be confusing and get you wracked with doubt as your equity curve whips around on the journey to riches.

Doubt finds its way into our mind so easily that it’s seriously important to make war against it and actively bolster our belief in our trading.  Here I share 5 ways to increase your confidence to stay on track.

1.    Back testing and data sampling

Back testing and data sampling can give a trader a deep understanding of the possible outcomes of a trading system.  This can help you interpret and put into perspective the results you get.

It’s important to take into account that when we backtest a system there’s always a strong likelihood that the results are overly optimistic from optimization and future trading will underwhelm.  However, testing different scenarios, systems and variables can help you internalize the varied results we encounter with trading in a way that prepares you for the realities of trading.

2.    Benefit from your own developing experience

As your own experience builds it becomes easier for you to understand the results you’re getting and to put some context on them.  Peaks and drawdowns in your account will become an expected part of your trading progress that’s not to cause excessive elation or fear.

As time goes on and future history is experienced in real time, we’re able to draw on the encounter and use the understanding we gain for the future.  Our experiences may have different names that are not repeated, like the Wall Street Crash in 1929, or Black Monday in 1987, but the rapid fall and rise in the markets occur over and over again.

We’re able to bank the learning from our experiences if we use effective risk management principles, to protect our capital, so we can trade through our darkest times and come out strong and better for it.

3.    Encouragement and faith from someone you trust

When you hit a patch where your trading makes you uncertain about your trading system, its results or what you should do next, the encouragement and guidance from someone you trust can make a world of difference.

Someone’s belief and confidence in you and your results can rub off positively, giving you that added boost to keep going, so you’re there to reap the rewards in the good times.

It will benefit you greatly as a trader to have the close confidence of a successful trader you respect and trust to help guide you through obstacles that present themselves.  This more experienced trader can help you gain a clear perspective and assessment of where you are and what you need to do to achieve highly.

Surrounding yourself with the right kind of people will help you forge onwards to success.

4.    Understanding probability

If you have a deep understanding of the concept of probability and how it affects your trading, it can put insightful and realistic perspectives on your results.

Good trading behavior and bad trading behavior is not rewarded with wins and losses respectively.  It’s a confusing place if your subconscious doesn’t understand and expect probabilistic outcomes from trading.

I use a probability-trading simulator to help gain full appreciation and acceptance of the possible outcomes.

5.    Balance the scales with positive inputs

Our minds are like an open vessel.  If doubting thoughts creep into our minds, they can fester like an untreated infection.  It always seems so easy for doubt to take hold with our trading, most especially if we’re going through a period of drawdown.

If we’re being overcome with doubt our minds have a habit of looking for supporting evidence to back itself up, giving our negative inputs legs.

The great news is that our minds are truly open.  It’s up to us to balance the scales and actively manage positive inputs into our minds.  Spending some scheduled daily time reading a success-based book, or listening to a CD in the car while driving, can make an immense difference to your overall outlook on trading and life.  It will help you find the confidence to push forward towards your goals and to overcome setbacks.

Stock up your storehouse of positivity and understanding

Having multiple ways to boost your belief and confidence in your trading can provide you with the passion and drive to push on.  I challenge you to reap the benefits of using as many as you can of the 5 ways to boost belief in your trading.  It’s often following our worst pain that we experience our biggest gains in trading.  Keep smiling and trade on.

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