Its always said Confidence is the part of successful person.Having Confidence in ourself a person can do wonders, Same applies to trading also.
Types of confidence among traders:
First, is what I call ‘false confidence’ That’s the person who talks big and poses like a big shot. This type of person often takes big risks in an effort to either impress others or to assuage their own discomfort, and the results can be terrible. Such person can be find at any brokerage terminal, who will talk big i got this news market is going to hit a Lower Circuit. They will trade big just to show off to colleagues and they will exemplify both their profit and losses.
Next, there is temporary confidence, which is conditional on recent performance. This is the person whose self-esteem is tied to their account equity or P&L. When on a good run, they feel confident and take larger risks (often the prelude to giving it all back). And when performance is lousy they start grasping at anything, maybe exiting winners prematurely or taking on excessive risk to get their money back.Remember how many traders were talking as if they are driving stocks in 2007-08.
Finally, we have true confidence. This is confidence that does not depend on recent results. It is based on a deep sense of inner trust. This is the person who has a history of doing the right thing, regardless of the outcome. Doing the right thing in the sense that they act in their own best interest and trust and understand that doing such over time has a positive impact on results. The trust runs deep enough to provide resilience in the face of disappointment. This is true self-confidence, the kind you want in trading and in life.
How do you build true confidence?
There are many ways but only one process: multiple small successes. I am very much an advocate for boring trading. What I mean by that is I trade the same edge over and over again without variation. By trading the same edge over and over again I know when to get in and when to get out. I know what to look for when a trade is working and I can safely add to my position. On the other hand, I know what to look for when the trade is not working and I can exit with a small loss. By following the rules EVERY TIME you can succeed, not in making money every time (impossible!), but by following the same plan every time. These small successes give you the confidence to trust yourself each and every time your edge presents itself. This is true in any new venture, whether it be golf, bowling, drawing, flying, etc. Each small success gives birth to greater confidence which in turn brings further successes. You can then replace a vicious circle of failure with a confident circle of success. It is so EASY to want the lottery ticket or the home run every time at bat but HARD to accept when the numbers do not add up or when all the preparation leads to nothing more than the hard earned single.
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