First if you haven’t read it check out David Blair of Crosshair Trader recent post. The infographic and explanation is one the best I have seen that maps out the difference between struggling and successful traders.
Welcome back. David’s post along with a conversation I had with someone who is trying to become a trader made me think about the two types of confidence. There is confidence in a trade and confidence in trading.
Think about the difference another way. You give me a hoop and basketball and I am confident I can make the shot. If it is the last second of the NBA finals shooting over Kobe Bryant I am not confident. I am more confident in myself than basketball.
Having confidence in a trade is easy. You do not know what is going to happen, blinded by opportunity. Every trade is new. Easy to convince yourself that this time it will be a winner. This takes no effort other than convincing yourself. This is what is described in David’s first circle. You can look at a chart and imagine you can do it. Hindsight. As a new trader I was very confident, but I was confident in myself.
Having confidence in trading is much harder. It requires you to have confidence in every trade. You have to look at a series of trades and results not just one. True confidence comes from a trading plan and process. This is what David describes in his second circle. Hindsight cannot be used. This is about execution. Execution does not lie and you cannot hide from it. As I matured I had confidence in myself as a trader after doing the work.
We would really appreciate your feedback, if you like, hate, or think we are full of crap. Please leave a comment, a voice mail (312) 725-9121, email info @ traderhabits (dot) com or twitter, stocktwits, youtube and facebook. Subscribe to Traderhabits by email or to newsletter.