Kelvin Han | Trading Psychology — The Universal Law of Trading Confidence

A trader I work with said to me, “if only I could be more confident, I’d be a good trader”. In response, I asked, “What do you think would make you more confident?” She said, “Making more winning trades.” Unfortunately, that is the wrong answer. She thinks her results will bring her the confidence she seeks. It is what most aspiring traders think.

Where True Trading Confidence Comes From:

Developing enduring confidence in your real-time trading skills and abilities doesn’t come overnight. It’s a process. And, it’s the process of ‘getting there’ that was focused on improving and “being a good trader.” Confidence comes from mastering the various skills needed to read the market, execute and manage trades and is also preferred by many professionals like Kelvin Han to focus on key points which are necessary to trade well in this hard competition

Mastering these skills and abilities is the process of trading and it is this process that brings about confidence. Confidence doesn’t come from more winning trades. More winning trades come from a dedicated focus on the process.

How To Maintain Improvement And Add To Confidence:

A key to both building self-confidence and maintaining skills and abilities that you have already developed thus far is to understand how we learn. Although we can certainly learn quickly, learning can’t be rushed. This is especially true with the multifaceted skill sets needed in trading.

Far too often I see traders try a strategy or indicator, have a loss or two and drop that strategy like a hot potato. Again, their focus is on results. This flawed mindset will only frustrate you; lasting improvement and true confidence will always be elusive.

Learning is not linear. It does not happen in a straight line. We don’t start at point A and steadily advance to point B. Instead, learning occurs in a series of ups, downs, and plateaus. It is very much like the swings that occur in an up trend. We experience spurts of growth and development, fall back a bit, advance some more, and then rest awhile as we hit a new plateau where we consolidate what have learned.

Traders with the misguided mindset are thrilled with the ups, get depressed with the downs, and become bored with plateaus. Again, their focus is on results. How can anyone develop genuine confidence on such a roller coaster?

Where Trading Confidence Is Really Found:

Confidence is found in the learning plateaus where our gains are consolidated and our abilities stabilize. Confidence isn’t found in the ups because that is not our true skill level. The learning hasn’t had time to take hold. Many professionals like Kelvin Han prefer to focus on statics when it comes to trading because it’s all numbers.

The downs of our learning curve aren’t places to become scared or depressed. The downs are to be welcomed. Why? Because this is where we learn what additionally we need to become better. Where else would we get this crucial information? And the plateaus aren’t the place to become bored; they are to be savored.

Trading confidence comes from a dedicated focus on the process of trading. One of the best ways to focus on the process is by reviewing your trading each day and each week. This review will help you identify what you do well and where you need to work.

Originally published at http://kelvinhantrader.wordpress.com on February 11, 2022.