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Build Your Trading Confidence

What is the definition of confidence? I define confidence as positive thoughts, feelings and actions reflecting your self-belief and expectations of your ultimate success. Success is never guaranteed, but self-doubt and negativity can ensure failure. When you believe in yourself, you move away from harmful distractions such as anxiety and fear, and you move toward a more effective performance focus. Today, we’ll take a look at how to make sure you’re confident enough to survive the trading game.

Aside from the obvious benefits, confidence also bolsters your internal security during trading slumps and gives you additional fuel to persevere through challenging periods. Self-belief promotes traders to create more ambitious performance targets, allowing for greater accomplishment. Traders who display low confidence tend to worry excessively about mistakes, lose focus on what’s driving results, quit trading at the wrong times and get overly worked up about each new trade. Excess confidence can also be dangerous in causing a trader to overcommit capital and be subjected to too much risk when a position goes bad. So your goal should be to promote the internal confidence while still showing the external disciplines to prevent the ego from taking over the consistent execution of a trading method.

Here are seven tips to encourage greater confidence:

1. Frequently visualize a successful trading process. What goes into good trading for you? Make sure you see the preparation required, the focus you have during the trading day, and the continous learning from both winning and losing trades to keep getting more effective.

2. Increase your level of physical fitness, as this will enhance both your trading alertness and give a boost to your self-image simultaneously. Both of these elements make you a more confidence trader.

3. Make a list of your strengths. Review this list regularly to remind yourself of how successful you really are.

4. Eliminate negative thoughts and memories. When they occur, replace them with positive self-statements (for example, “I create my own luck” or “I have a good written plan of how I will execute my trades”).

5. Have a general strategy going into each trading day. When you prepare the day before, you position yourself to be proactive and gain confidence as you implement your plan. How aware are you of what you’re experiencing in your mind, body and soul at any moment?  You need to set up a monitoring system at the end of each trading day, to summarize what you executed according to your rules and what you did not.  Look for patterns in your behavior, that you can copy if they work for you, or minimize if they are costing you.

6. Create positive body language regardless of the gain or loss on that trading day. The way you act will often influence the way you feel for future trades. The more confident you feel, the more confidence you will show in your trading.

7. Improve on areas of weakness during preparation time and you’ll create more confidence and belief during the trading day. 

Focus on one of these seven tips at a time, until you can build that area as a habit in your routine.  This will service to greatly improve your trading confidence over time.

5 Trading Wisdom

“Never let the fear of striking out get in your way” – Babe Ruth

“If you can’t take a small loss, sooner or later you will have to take the mother of all losses” – Ed Seykota

“Don’t think about what the market is going to do. You have absosutely no control over that. Think about what you are going to do if it gets there.” – William Eckhardt

“I turned from a loser to a winner when I was able to separate my ego needs from making money. When I was able to accept being wrong. Before that, admitting I was wrong was more upsetting than losing money” – Marty Schwartz

“The worst mistake a trader can make is to miss a major profit opportunity. 95% of the profits come from only 5% of the trades” – Richard Dennis

Ray Dalio Principles

Afew gems taken from Ray Dalio’s Principles. Here’s the link to the ‘Principles’ Ray Dalio founder of Bridgewater Associates published:

  • I remained wary about being overconfident, and I figured out how to effectively deal with my not knowing. I dealt with my not knowing by either continuing to gather information until I reached the point that I could be confident or by eliminating my exposure to the risks of not knowing.
  • While most others seem to believe that learning what we are taught is the path to success, I believe that figuring out for yourself what you want and how to get it is a better path.
  • How much do you let what you wish to be true stand in the way of seeing what is really true?
  • How much do you worry about looking good relative to actually being good?
  • The most important qualities for successfully diagnosing problems are logic, the ability to see multiple possibilities, and the willingness to touch people’s nerves to overcome the ego barriers that stand in the way of truth.
  • Know what you want and stick to it if you believe it’s right, even if others want to take you in another direction.
  • In a nutshell, this is the whole approach that I believe will work best for you—the best summary of what I want the people who are working with me to do in order to accomplish great things. I want you to work for yourself, to come up with independent opinions, to stress-test them, to be wary about being overconfident, and to reflect on the consequences of your decisions and constantly improve.

Overconfidence

OverConfidenceIt is common for traders to complain of a lack of confidence in their trading, but very often it is overconfidence that does them in.  Overconfidence results from a lack of appreciation of the complexity of markets and an underestimation of the challenges of trading them successfully.  In a sense, overconfident traders lack respect for the markets.  They think that reading about a few setups or buying the newest software will prepare them to make money.  Overconfident traders don’t want to work their way up the trading ladder:  they resist the idea that screen time is the best teacher.  They also chafe at the idea of growing their account.  Rather than start with one contract and wait until they’re profitable before trading larger size, they want big positions—and profits—right away. Because they’re so eager to make money—and so sure they can make it—overconfident traders generally trade impulsively.  They won’t wait for the setup to form; they’ll jump the gun—and get whipsawed in the process.  Instead of being patient and waiting for short-term patterns to align with longer-term patterns, they will take every trade, enriching their brokers in the process. (more…)

Typical Symptoms of Ego-Tizing Trading

  • Not putting in stops. The ego doesn’t want to be proven wrong.
  • Hesitating before putting on a trade. The ego wants reassurance before it begins.
  • Overtrading. The ego wants to prove itself big time.
  • Getting stuck in a trade. The ego has intertwined itself with a trade and is holding on for dear life. It cannot cut out. The ego doesn’t want to be wrong.
  • Adding to a losing trade. The ego digs its hole deeper in a massive effort to crawl out.
  • Grabbing a profit too soon. The ego wants a pat on the back.

Happy Diwali

Happy Diwali & Happy New Year Dear Subscribers & Our Readers, We wish U great Diwali & Great Coming New Year.

  1. Quit letting trades go through your original stop loss, you were wrong, get out. When you start hoping and stop managing your stops you are losing money.
  2. Quit over trading, only take the very best entries and trade the very best stocks in your system.
  3. Quit making up stories about why you decided to hold your position instead of taking your stop when it was hit. trade your plan.
  4. Stop trading your opinions and start trading what the price action is saying.
  5. Stop following people in social media that cause you to trade badly and lose money.
  6. Stop looking at BLUE Channels  for trading and investing advice.
  7. Stop trading so big that you emotions are more involved in your trades than your mind.
  8. Disconnect your ego from your trading. You determine your risk size and entry the market chooses whether you win or lose.
  9. Quit riding an emotional roller coaster, your emotions should stay level when winning and losing. If not trade smaller.
  10. Quit buying falling knives and shorting rocket stocks, wait for confirmation and reversal before entering.
    Technically Your’s

    AnirudhSethiReport-Team/Baroda/India

40 Trading Lessons

1. Trading is simple, but it is not easy.

2.  When you get into a trade watch for the signs that you might be wrong.

3.  Trading should be boring.

4.  Amateur traders turn into professional traders once they stop looking for the “next great indicator.”

5.  You are trading other traders, not stocks or futures contracts.

6.  Be very aware of your own emotions.

7.  Watch yourself for too much excitement.

8.  Don’t overtrade.

9.  If you come into trading with the idea of making big money you are doomed.

10.  Don’t focus on the money.

11.  Do not impose your will on the market.

12.  The best way to minimize risk is to not trade when it is not time to trade. 

13.  There is no need to trade five days a week.  

14.  Refuse to damage your capital.

15.  Stay relaxed.

16.  Never let a day trade turn into an overnight trade.

17.  Keep winners as long as they are moving your way.

18.  Don’t overweight your trades.

19.  There is no logical reason to hesitate in taking a stop.

20.  Professional traders take losses because they trust themselves to do what is right. (more…)

FOCUS

Have you ever stopped to consider how many different trading strategies there are? How about time frames for each strategy? And what about the best instrument to trade that strategy within the time frame selected? What about the indicators? Which ones are we planning to apply to the strategy? If we were to add it all up there are literally hundreds, if not thousands of strategies, just in one time frame! And what about the other traders trading one of these strategies that may be designed specifically to trade the opposite of what you trade? There is absolutely no way humanly possible to master all, or even a large number of, the strategies available to us. Therefore, we must focus on a particular strategy and become a strategic specialist. In doing so, we defeat the ego’s need to know everything, which we know is impossible in the first place.  With focus, we can think clearly about our specialized strategy knowing when and where to enter and exit the market since we know exactly what the market is supposed to look like to do either one.  This focus helps eliminate the confusion and frustration we experience when the market does not make sense (which is most all of the time!).

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