As you are learning to trade you get these pieces of wisdom but do not understand how helpful they actually are.
After talking to my mentor, Anthony Crudele (DELI), on a particularly bad day, he saw that my confidence was shaken. He asked what was wrong. I told him that I didn’t think I could do this anymore, I didn’t want to do it anymore. I didn’t want to risk anymore money. He told me that it was going to be OK.
I didn’t believe him, my head was spinning so fast I thought it was going to fall off. My life was over. I was going to have to find a real job. I had failed. I had to tell everyone I failed. I was just like every other person who only lasted a few months.
He laughed at me, I hadn’t been trading very long. To simplify his advice: exit every trade the same, confidently.
I didn’t even know what confidence was at that point but that little pep talk and my blind optimism brought me in the next day. Ego is often times confused for confidence. Ego, to me, is confidence in yourself. It is more about what you think you can do while confidence is about what you can do or are about to do.
What enables a trader to exit every trade the same way, with confidence?
- Preparation: If you put yourself in the best possible position and you lose money at least you spent that money wisely. Good things happen to those that are prepared because 90% of people do not know how to do it or are unwilling.
- Purpose: Acting with purpose. You prepared, you knew the risks, you executed the way you wanted to execute. In cold blooded evaluation you would do it the same with the information you had at the time.
- Protection: Losing the invisible money is how I have seen many people blow up. Invisible money is not locking in profits or losing more than your plan allowed. If you lose what you intended to risk you own the trade, if you lose more the trade owns you.
Your goal as a trader is to always reduce the time it takes to analyze, react, and recover. The best traders do this effortlessly after much thought, experiment, and practice. I lacked confidence because I thought about the wrong things or not at all and I was doing random things all of which made it too costly, emotionally and financially, to practice.
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