I’ve been getting a lot of questions about Trading Confidence ,today we will discuss on trading confidence.
In my experience as a trader and performance coach, I see three types of confidence among traders, and the type of confidence is of critical importance when it comes to discipline.
The three types of confidence:
- 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 are often erratic and often end terribly.
- 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.
- 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 so 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.
In my many years of experience, I’ve discovered this to be a major part of the foundation for discipline.