Top-notch traders don’t follow the crowd. They lead it. They anticipate what the masses are doing, and capitalize on how they are mindlessly swayed by the current mood of the markets. Seasoned traders, in contrast, make a careful assessment of the factors driving the price, and trust their instincts when devising and executing a trading plan. They look inward. They trust their intuition. They go their own way. Going your own way isn’t easy, though. It takes guts, courage, and confidence. It’s hard to take a risk when there’s a good chance that the path you take may lead to a devastating blow.

To take such risks and rely solely on your intuition, you must have rock-solid confidence. It can’t waver. Your confidence can’t rise with your account balance and fall during a drawdown. It should be based on feelings that reside deep within your psyche. Self-confidence should be so ingrained within your being that nothing can shake it. The more genuine self-confidence you have, the more profitable you’ll trade.

Not everyone has rock-solid confidence. Some people appear confident, and they are to some extent, but only as long as everything goes their way. It’s all just an illusion. When you look more closely, their confidence wavers. It’s super high to the point of arrogant overconfidence when they are riding the wave of success, but it can plunge to the depths of despair during a setback. It is a false sense of confidence. They appear confident on the surface, but it is merely because they have always been the king of the hill. They were born into the right set of circumstances and everything just seemed to go their way.

To those who feign self-confidence, it’s much like living an entire life in a small town where everyone knows them. All are familiar, and they feel comfortable and secure. They may feel safe in familiar surroundings, but know that they can’t survive in the big city where uncertainly lurks around every corner. Self-confidence, in the end, only comes from mastering various life experiences. Unless you’ve overcome life’s barriers and successfully triumphed over hardship, you will never truly feel you can tackle anything. This is true in life and it is true in trading.

If you learned to trade in a strong bull market where prices go up and never hit resistance, you’ll feel you can’t lose. It’s like those long-term investors during the 1990s that thought they could trade just because, through little more than luck, they picked a company that just happened to go up due to media hype. That’s not trading. If you want to be a truly robust, winning trader, you have to look at the dynamics of a stock, study the factors that underlie the price move, and go with your instincts. The more you trade in such markets, and succeed, the more genuine self-confidence you will have, and the more profitably you will trade.

There is no substitute for experience. You can be lured into trading the markets during a bull market and feel like a natural-born trader, but then the markets change, and profits are suddenly elusive. At that point, you must look deep within yourself and decide to shrink away or do whatever it takes to master the markets. It isn’t going to happen overnight, but if you gain as much experience as possible, you’ll eventually gain mastery.

If you study the markets, accumulate valid knowledge, and trade under a variety of market conditions, you will hone your skills to the point where you will feel confident that you can make a profit when conditions are right. Just like an athlete training for the Olympics, you must work toward the one moment in time where you can trade at your peak. You’ll know what you can do and what you cannot.

You don’t need to trade like a superstar. You just need to know precisely when you can trade profitably and when you usually choke. Only when you achieve such self-knowledge will you have the confidence to trade in a peak performance mental state. And once you have developed that kind of rock-solid confidence, you’ll achieve enduring financial success.

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