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Success is the mother of confidence

How do you build 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.

Success is the mother of confidence

How do you build 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.

Small Things Matter

Ask many experienced traders to describe their most profitable trade, and you’ll hear a fantastic story. It’s usually purely chance. I know it was that way for me on a number of occasions. For example, the trader may have been going long on a large position when suddenly a report came out that shocked the market. Prices shot up as the public heard the news, and the trader made a killing. These stories are thrilling. They inspire you to sharpen your trading skills and master the markets. Who doesn’t want to be at the right place at the right time? But if you want to be a profitable, consistent trader, you can’t sit around waiting for a fantastic trading opportunity to present itself. Most of the time, trading is about making trade after trade to the point that it seems boringly routine. Rather than seek out big, exciting trades, it’s important to remember that small trades matter a lot.

As thrilling as big trades seem to be, it’s the smaller trades that keep you in business. It’s not unusual for traders to feel they have reached a plateau when trading. They make trade after trade and little seems to happen. They don’t suddenly find the Holy Grail of trading and achieve the great wealth and status they’ve dreamed about. Whether they realize it or not, however, they are still making progress. Each new observation of the market, each trade they execute, no matter how small, adds to their wealth of knowledge. They intuitively learn what to do and what not to do. They may see a slight variation in chart pattern that creates an inefficiency in price and learn just how far the pattern can deviate from the norm and still forecast the most likely movement of prices. On another day, they may learn a new way to place a protective stop so that they protect their risk, yet don’t get stopped out prematurely. These small everyday, seemingly insignificant experiences matter a lot.

Trading is challenging. Few survive trading over many years. The traders who do survive, however, know how to stay focused and patient. They don’t go for quick thrills, and unrealistically huge profit objectives. They know that losing is easy and can happen in the blink of an eye, but rebuilding capital usually takes a lot of work over a long period of time.

Instead of going for risky, exciting trades, you must seek out high probability setups, take steps to protect your capital, and execute your trades decisively, according to your trading plan. You may not have an exciting tale to brag about, but you take home steady profits–you get paid to trade. And when you make trade after trade, the small profits add up, and you end up with big profits in the end.

So when you feel that your earnings have reached a plateau, don’t get discouraged. As long as you are making profits, and staying in business, you’re continuing to develop your trading skills. You’re adding to your knowledge base. You’re developing a more intuitive feel for how the markets operate. It may not seem like you’re making the profits of a trading wizard, but if you keep at it, you’ll be one of the rare few that join the ranks of winning traders.
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Trade what you see, not what you think!

Success is the mother of confidence

How do you build 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.