Question:
How does one develop the confidence to trust in one’s own analysis? In my experience, my analysis is usually right, but I develop cold feet and close out my positions.
Shiva from Trustville
Answer:
Shiva, confidence builds when you actually succeed at something. Each time you succeed, you add another brick to the foundation of confidence. The particular endeavor is irrelevant (it could be anything). All you have to do is get it right enough that you BELIEVE in your ability to achieve the outcome you desire.
If you are pulling out of trades before they can bring you the goods, then you need to start TRUSTING in your ability, even if it is uncomfortable for you. Take that “moment of fear” and swallow it. Push it down, back to that place from where it came. Close your eyes, isolate the fear, feel it, and then mentally step right past it. In short, overcome your fear with trust.
Choose your ability over the fear that you might be wrong. True, sometimes you will be wrong, but the way it sounds now you think you are always wrong, so you pull up short. Remember, successful trading is not about being right every time—it is about being right ENOUGH times to make money. And the only way you can be right enough times is to actually see your trade through to the end, right or wrong.
Summary: Hard work develops your ability. Utilizing your ability develops trust. Trust overcomes your fear. Overcoming your fear allows you to follow through to achieve the outcome you desire. Follow through successfully enough times and you will believe that you can do it at will. All of this is confidence, which is the opposite of cold feet.
Ultimately, no matter how much time, money, energy, or effort you spend learning how to trade, if you cannot “pull the trigger” with confidence, you will find your trading “hit and miss” at best. Ironically, you might have to emotionally work through a few failures to build that foundation of confidence. When it comes to trading, or Life for that matter, what else is new?
Trade in the day; invest in your life …
