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Being confident

Being confident is the ultimate prize for any trader; some call it being in the “zone”, some others talk about finding the “Holy Grail”. What it really means is that, as for any performance based endeavours, trading will satisfy you only once you reached the state where “you know what you do”. Trading is not different from any other demanding undertaking, it requires mastering the different stages of the learning curve and the quality of this learning process depends on how focused and disciplined the trader is in honing his acquired skills. Once the trader has identified, through practice, what markets, methodology and timeframe he is comfortable with, he will slowly gain confidence in himself by systematically repeating all of the steps that constitute his trading plan until it becomes part of his personality. Just as for a tennis or a golf player, being confident makes the difference between winning and losing, so it is for the trader. And, just like the tennis or golf player, the trader can only gain this confidence through a well worked out set of skills, a battle plan and the continuous practice at a performance level. Losing focus or relaxing the discipline will very rapidly threaten the trader’s confidence. Hence, it is of the utmost importance to understand that this virtuous circle has to be maintained during every trade. And here we touch the challenge for any trader: only the repetitive and focused practice of his plan will ensure that he will stay confident in his trading. This can only be achieved through a balanced and healthy way of living and a sound detachment of the day to day results.

Four Fears

Most often, traders have four fears. There’s the fear of being wrong, the fear of losing money, the fear of missing out and the fear of leaving money on the table. I found that basically, those four fears accounted for probably 90% to 95% of the trading errors that we make. Let’s put it this way: If you can recognize opportunity, what’s going to prevent you from executing your trades properly? Your fear. Your fears immobilize you. Your fears distort your perception of market information in ways that don’t allow you to utilize what you know.”

"Truth and Trading"

1. Truth: Truth is an absolute value. Some things are true in all places and times. Resisting evil, for example, is always right.

2. Justice: Justice consists of treating others as one would wish to be treated. “Do unto others as you would have them do unto you” summarizes this concept of justice.

3. Courage: Courage means standing up for justice.

4. Moderation: Nothing should be carried to excess.

5. Wisdom: Wisdom enables a person to know what justice is, to recognize when courage is required, and to do what is right.

So how do these values play out in our trading? In this column, let’s explore truth as it applies to your trading.

One of the clear, clean things about trading is that truth is immediately and finally manifested. The price goes up or down or nowhere. Your trade or position is profitable or not. You can’t spin it any other way. You’re right when you make money. You’re wrong when you lose money. That’s just the way it is.s

There are also other truths involved. You just got lucky. You have a robust and proven method for trading that you can rely upon over time. Your methods are flimsy at best, unpredictable at worst. You have no method or you have a million methods which amounts to the same thing. Your impulses frequently and easily override your methods, or you rigidly apply your rules even when you clearly should not.

You keep clear records so you can assess what works best, or you don’t and at the end of the day (or the week or the month), you have no idea. Your record of action is either clear or murky. To correct it, it needs to be clear.

You need to tell yourself the truth as you go along. No excuses. No complaints. No trumped up stories. If you can truthfully analyze your trading mistakes as well as your trading strengths, you can make adjustments, and develop a personal style that will lead to trading success.

Telling the truth about each day’s (week’s, month’s) trading doesn’t mean you have to be brutally cruel to yourself or gloomy about your trading. What it does mean is that you don’t have to do that again, and you can optimistically look forward to the next day’s trading. You will know the truth, and the truth will make you free.

You want to keep your trading in true alignment with any known or possible clues as to the on the ground truths in relevant areas. There are fundamental truths, technical truths, methodological truths, inter-relational truths, and personal truths. The closer you can get in any or all of these areas, the better your prospects. You will seek to know the truth, and those truths will power your trading.