Building Self-Confidence as a Trader

The other day a trader reached out to me for a helping hand. He wanted to learn more about how to become a more confident trader.  It’s a great question and one I have spent time thinking about and working on for my own trading. In my mind we are looking for the sweet spot (as defined by me) between lack of confidence and cockiness. Stereo-types however lead us to believe that the most successful traders are also the cocky ones.  Confidence taken to the extreme.  I don’t think it’s true. What is true IMO, is that cockiness can lead to eventual ruin because the trader can never envision true risk or imagine being wrong.  For the purposes of this note, let’s define the sweet spot as “quiet confidence”.

Ideas on Building Self – Confidence

1. Transition from Seeking Shortcuts to putting in the Work
I think there is something deep within all of us that seek and relish a short-cut. Successful people push that urge down so that it really does not emerge into their actions or thought processes.  Some of you may know that I enjoy cooking and seeing my family and others enjoying the fruits of my labor.  The recipe is simple; Fresh ingredients and the willingness to put in the time.  You’re not going to have great Mac n cheese out of a box. You need a solid process ( the recipe ) and be willing to put in the time.

Confidence in cooking or in trading stems from a willingness to put in the hard work. The hard work of sifting thru hundreds of charts, the hard work of creating, tweaking, polishing, and following a trading process.  We’ve talked about owning ideas before; it’s critical to building confidence.  There’s a bridge that must be crossed from idea origin to idea ownership. When I offer or you see a trade idea, take that idea and rip it apart. Dissect it and see if it makes sense for you. A blind follow is a trade gone wrong from the get go. Even if you make a lot of money from tagging along other folk’s trades, no confidence will be built.  I see a lot of people racing around frantically trying to find “good follows” on social media almost as if that is their edge… Finding the best traders to tail.  Although I am not deep into it, it was a problem for me too. Less so now.
True success has no short cuts. Focus on your work. Put in the time. Good things will come your way. Your sense of accomplishment and confidence will grow.

2.  Transition from Negative Self Talk to Positive Self Talk              
When we focus on everything we could have done better and everything we did wrong, we create mini failure experiences for ourselves over time.  Our self-talk reflects our relationship with ourselves.  How can we feel confident in who we are and in what we do if we’re constantly tearing ourselves down?  When faced with a disappointing result from a trade, try to engage in positive self-talk and look for the many good aspects about the trade. Examples:

  • My short thesis was spot on; my timing was off just a tad. I can improve that.
  • Sure I lost some capital,  but I had the discipline to follow my process to the letter.  Good Trade!
  • The trade was a great learning experience. I walked away with several important lessons I can apply to futures trades. I’m growing as a trader. I am devoted to this craft.
  • Want to work on learning how to engage in positive Self-talk?  Go to Amazon and BUY …
    • “What to Say When you Talk to Yourself”  by Shad Helmstetter                        available for $2.53
    • I have a 20 year old copy on my bookshelf;                                                                          I think I will read it again. It cost me $5.99

Try this. Imagine each day and each week beginning with challenging, meaningful, and doable goals.  Write down what you want to accomplish. As you check them off, Over time, you build a library of success experiences and internalize the sense of being successful.  True confidence is earned, but it’s also learned.  It’s the expression of optimism, as applied to ourselves.  Confidence, like its absence, is ultimately the conversation we choose to have with ourselves.

3. Identify, then play to, your strengths
Many traders attempt trading styles that don’t match their personality and cognitive strengths.  Over time that generates frustration and erodes confidence.  Work hard at matching your skill set and personality to the trading style you employ. To a certain degree this is a trial and error process.   For a while I tried to be a Swing Trader and be a Day Trader on the side.  Didn’t work…….but I sure tried.  In the end, the skill set and temperament for Day Trading does not suit me well.  Swing Trading is in my wheelhouse. Trying to force Day Trading into my mix was a real confidence killer. My frustration at lack of success in Day Trading overwhelmed the good things that were happening on my Swing Trades.  Document your feelings in your Trade Journal when you try different trading regimes or styles. I think you’ll soon know in your gut if something isn’t right.

4.  Avoid and reject negative environments; Seek out and Embrace Positive Ones
Imagine if you were helicoptered deep into the Rocky Mountains and dropped into a commune of hardcore survivalists. Upon arrival, you’re handed a gun and a Manifesto explaining in deep detail how the Government is after you. Doomsday is near. At first you laugh at the comical notion, then 3 weeks later you’re practicing your marksmanship with a bazooka and organizing the ammo bunker.

We absorb the ideas and attitudes of the people that dominate our environment. Same is true for we traders.  If we hang out with the “trader’s lonely losers club” would we be surprised to feel confidence being drained from our existence?  Losing is a part of trading, but it doesn’t have to be a lifestyle.  Find a diverse mix of positive people and traders to associate with. Get out of the chat rooms where the prevailing view is that Lloyd Blankfein is pulling on all the strings so it’s impossible to succeed. If you truly believe that, simply stop trading.

Hanging out in the wrong places can also affect your P&L along with your confidence.  It happened to me in the Spring of 2016.  I’d like to think I am a good market technician. I can certainly identify pattern changes, trends and  breakouts etc. How then would it be possible for me to miss, ignore, or even shoot against a powerful rally?  Because I was living in the Bear Base Camp. Daily readings of Bearish theses, homing in on all the bearish macro factors that are out there of which there are many, seeing earnings collapse etc.  It was no different than living in the survivalist commune; boogeymen everywhere.  I subjected myself to a harsh bearish environment that blinded me from bullish chart input.  In trading what you call an advance really doesn’t mean anything.  Bear market correction or Bull rally?  Who cares!  If price is going up, get long or step aside if you don’t trust it, but certainly don’t hold shorts or fire bazookas. Price = Truth. Opinions about the whys and what-for’s are pure speculation and wont contribute one iota to your P&L. 

Prescriptions to re-boot your attitude and to begin building Self – Confidence

Think about this one. I challenge you to “Trade like a Monk” for 6 weeks .  Imagine yourself as a monk in a cave on the far edge of civilization. All you have is your trading platform and your charting package. No phones, no chat rooms, no blogs, no TV to distort your market input.  Can you imagine the clarity of your thinking going sky high?  Can you imagine truly owning your trade ideas?   Can you imagine the confidence you’d gain by seeing and  trading pure market input?

These ideas are free and you can start tomorrow.

  • No more reading Seeking Alpha Articles – zero
  • Go on a sabbatical from chat rooms that, while filled with good guys, do little to advance your own knowledge or effectiveness as a trader.
  • No more Zero Hedge or other blog sites which is the market equivalent of the survivalist camp in one form or another.
  • No more CNBC.  None.  No Halftime show, Fast Money or Cramer.  Think of all those free hours you just gained to do your own market analysis.
  • Take a vacation from Twitter / StockTalks / StockTwits.   For go spending time trolling endless posts for the next big idea. The answers and opportunities you seek are right in front of you in the charts.
  • No longer subject yourself to opinionated market commentary; It won’t help you and very well may be hurting you and your performance.


I challenge you to follow the above ideas for 6 weeks. It’s a big ask.  From experience, I know 95% of you either wont try it or will fall off the wagon within a week as you battle symptoms of withdrawal. The reward for challenging yourself however will be great. For the 5% of you that give it your best effort, you will emerge a different trader. You will emerge a more confident and disciplined trader. By eliminating all the noise, you will become very attuned to market input.   You should experience a groundswell of self-confidence. A self-confident trader is a powerful trader.   Beginning that journey is one of the most important things a trader can do.

If you decide that it’s worth the effort and give it a try , keep me posted on your progress.  Either post a comment here for others to see and learn from, or send me a private note.  Reach me anytime at [email protected]

Happy Hunting and Good Trading!

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