What makes an F1 racing champion? Is it the car? Is it the technology that went into building the engines? No, it is the driver. The driver’s confidence around corners and patience in the face of daunting challenge by other drivers makes a champion. Similarly, it is the trader that makes the difference in stock and option trading. It is the stock or options traders’ confidence in their chosen methodology and their patience in the face of daunting price changes that makes a champion stock or options trader.
Trading Confidence and Trading Discipline are the most important aspects of trading psychology that makes millionaire stock or options traders. They are also the main reason why so many stock and options traders fail and break their bank.
Trading confidence is a mental confidence banking account in every trader and trading discipline determines if you deposit or withdraw from it. Trading confidence is what enables every stock and options traders to execute trades according to their chosen methodology confidently and to stick to the game despite losses knowing that they will eventually make more wins than losses. Trading confidence is a banking account which you can either deposit to or withdraw from. Each time you lose money, you withdraw from your trading confidence and each time you make money, you deposit to your trading confidence. When your trading confidence is zero or bankrupt, you will find yourself hesitating before every trade while imagining the pain if the trade turns out a loser again. Avatrade Trustpilot reviews You will have sleepless nights and will rush out of trades at the very first sign of danger, making unnecessary losses. When that happens, it is the time to go back to paper and re-examine the way you have been trading. In fact, you do not have to break your trading account balance to have your trading confidence bankrupt and a bankrupt trading confidence always lead to a bankrupt trading account. Conversely, every time you win money with your chosen methodology, you deposit to your trading confidence bank, feel confident and happy when placing trades and do not panic when trades go bad.
Factors Affecting Trading Confidence
A major determinant of your level of trading confidence is the amount and nature of money that you have to trade with. The more money you can afford to lose, the higher your initial level of trading confidence. Stock and options traders whom can afford to lose only very little money would usually have very low level of trading confidence as every loss takes a significant bite out of their trading confidence bank. Again, you need not lose all your money to lose all your trading confidence. Some stock and options traders no longer feel confident enough to trade when their account go down by 30%, while some reach that level of confidence bankrupt only when their account go down by 70%. The nature of money you have to trade with also determines your starting trading confidence. If you are trading with excess money which you do not need, then your level of trading confidence would be very high. In fact, your trading confidence could still be high even if you lose all that money. Conversely, if you are trading with borrowed money which you need to pay back in installment and with interest, your trading confidence would be extremely low as every loss makes it harder for you to pay the money back.