It was nice to see that my recent webinar on self-confidence in trading had about 325 live attendees.  I wanted to mention a few things  I didn’t have time for. In the webinar I defined self-confidence for a trader as resilience in the face of disappointment. Additionally, most people, traders included, don’t realize that self-confidence is a required precursor to discipline.

 

True discipline, the kind that is durable and doesn’t disappear when the going gets tough requires a foundation of true self-confidence. And of course, without confidence in a trading method or strategy, no amount of self-confidence is going to take you very far as a trader.

 

Lets take a brief look at the relationship between self-confidence and a common trading problem, the fear of being wrong. The fear of being wrong is essentially the fear of failure.  Anyone who understands trading will agree that losing, or being wrong is part of the business of trading; and if you look at trading through the lens of self-confidence, you will realize that true self-confidence acts as an immunization against the damage and negative consequences that fear can create.

 

Fear will always exist, but with self-confidence we can insulate ourselves to some degree from letting the emotion of fear turn into a behavior that is not in a trader’s best interest.

 

Is it really that simple? Yes. The problem is that the majority of traders do not have true self-confidence. Many think they do, especially when on a good run, but when that run is over, what they thought was confidence is no longer there. And that is a sure sign that the ‘confidence’ during the run was really not true self-confidence.

 

It reminds me of where the saying,  ‘con artist’ comes from.  A con artist is someone who artfully instills a sense of confidence in their mark in order to take advantage of them. Don’t be your own con artist. Instead, work on building true self-confidence that is durable and resilient in the face of disappointment and will lead you to act in your own best interest.

 

I can hear the questions already…how do we build true self-confidence?  Lots of ways, one way is for a trader to act in your own best interest at each critical juncture where a decision needs to be made, and doing this consistently over time.

 

Yes, it’s a feedback loop of sorts. By doing this over time, you continually build self-trust and self-confidence, even in the face of discomfort and fear. When the feedback loop is broken by an action that is not in your own best interest, you have to begin the cycle again. Essentially, it is on-going process. As someone once said, once we think we’ve arrived, the real work is just beginning.

And another way of building true self-confidence is by understanding and dealing with any conscious or subconscious (harder to do) fear of not being good enough.  That’s an entire topic unto itself. A big part of my work as a performance coach.