A liberal but cautious dose of self-confidence can improve any trader's outlook...and his success rate, writes Price Headley.
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.
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:
- 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 continuous learning from both winning and losing trades to keep getting more effective.
- 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 confident trader.
- Make a list of your strengths. Review this list regularly to remind yourself of how successful you really are.
- 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").
- 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.
- 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.
- Improve on areas of weakness during preparation time and you'll create more confidence and belief during the trading day.
Price Headley can be found at BigTrends.com.