Confidence is a key trait that is possessed by many successful traders. Unfortunately, many traders do not realise the significance and importance that this character trait has on their ability to be a successful and profitable trader. We know that many traders fail within their first year having depleted their accounts and they then come to realise that a career in the financial markets is not quite as easy as first thought.
The ability to be a ‘Confident Trader’ is not purely something that is built into a trader prior to embarking on their new career within the financial markets, but is something that is nurtured and developed over time. A trader can find or create a trading methodology that is truly spectacular and one would find it hard to envision that they could possibly fail. Yet they still do !
Confidence about a methodology is the key to becoming a successful trader as it helps to engender good discipline and provide the ability to act strictly in accordance with defined rules. One of the major failings found in many traders is their belief that they know better than the market and start to avoid trades that do not have a ‘good feel’ about them. It may be found that they require that X,Y and Z rules be in place before entering the market and yet they have a good feeling and will go this time with just X and Y. This lack of discipline will render their methodology redundant and as such change their rule based methodology into a discretionary one. So how can we build confidence ?
We can generate confidence in our methodology by recording and analysing trading opportunities over a period of time. Having the ability to observe how the methodology performed by testing rules X, Y and Z over time, provides irrefutable evidence which can then be measured and then translated into levels of confidence. Similarly, our ‘personal performance’ as a trader can be recorded and analysed by means of a Trading Journal. We can analyse how we performed and provide evidence that allows us to determine under which conditions we are then required to trade.
Confidence is built by having analytical evidence of how well the components of our methodology perform over time. Our education package addresses this topic and highlights that Successful Traders are Confident and Disciplined followers of a proven methodology.
