I recently read an important article by ThinkingHumanity.com on what highly confident people DON’T do to achieve their success in business. These principles apply just the same to successful traders.
Here are five trading lessons I picked out from that article that confident traders don’t do
“They don’t avoid doing the scary thing”
Highly confident traders don’t take the easy road. They know that the things that are scary to do, are often what’s needed to succeed as a trader.
For example… When a trade is going your way, the easy thing to do is to get out of the trade for a small and premature profit.
The scary thing to do, however… is to hold onto the trade until it hits your take profit level, knowing it could turn around and hit your stop loss.
“They don’t live in a bubble of comfort”
Taking a loss is probably one of the hardest things you can do as a trader. You simply don’t want to be wrong. So often I see, novice traders ignore their stop loss rule and keep holding a trade even though its going against them. This gives them some form of comfort knowing they aren’t wrong yet as they’re still holding onto their trade.
When you hold onto a loser, you feel like you still have hope and comfort with the trade. But you’re fooling yourself.
Make sure you don’t ignore a stop loss. Rather take a small hit now than a bigger one later.
“They don’t obsess over the opinions of others”
When you have a proven trading strategy, with rules, everything else doesn’t matter. Don’t worry about what Bloomberg, your friends or news articles are saying about local or international markets. These external opinions have nothing to do with the performance of your trading strategy. If it did, then you would have included them into the rules.
So instead, follow your strategy as it is and forget the rest.
“They don’t need constant reassurance”
Confident people aren’t in need of hand holding. You don’t need to ask anyone their opinion on what they think about your current trading positions.
Remember, when you have a trading strategy with proven results – YOU KNOW BETTER.
“They don’t quit because of minor set-backs”
When incurring losses after a losing streak, confident traders keep at it. A confident trader will first lower their risk per trade from say 2% down to 1%.
They’ll then re-analyse and go over their trading strategy again to see why the trading strategy isn’t performing as well as they expected it to.
Confidence comes with independence, the more you have your trading strategy in order, tried and tested – the more confident you’ll be as a trader for your financial future.
