Experienced traders don’t follow the crowd. They lead it

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Experienced traders don’t follow the crowd. They lead it. They anticipate and capitalize. They make a careful assessment of the factors driving the price. With experience they have come to trust their instincts when devising and executing a trading plan. They look inward and trust their intuition. They go their own way.

This is not unwarranted cockiness but confidence and intuitions gained through experience. Going your own way isn’t easy. It takes guts, and confidence. It’s extremely difficult for most to take a risk when there’s a good chance that the path may lead to a devastating blow. To take such risks and rely solely on your intuition, requires rock solid confidence. It can’t waver. This is not the confidence gained with a rise in your account balance that will fall and waiver during a drawdown. It’s a confidence 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.

Some traders appear confident, and they are to some extent, at least as long as everything is going their way. Few have rock solid confidence. With most people confidence waivers; it can be super high even to the point of arrogant overconfidence when they are on a roll, but it can plunge to the depths of despair during long setbacks. This is a false sense of confidence. Some will appear confident on the surface, but is it merely because they have always been “king of the hill.”  In the end however, self confidence 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.

Unfortunately many new traders’ learned to trade during strong bull markets where prices go up, up, and away, and they feel they just can’t lose. Remember all 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.

Bull markets can make one feel like a natural born trader, but when the markets change, and change they will, and profits are suddenly elusive the confidence turns to despair. This is the time you must look within you and decide whether to go away or do whatever it takes to master the markets. It will not happen over night but if you persist and gain as much experience as you can, eventually you will gain mastery. You don’t need to trade like a superstar. You just need to know precisely when you can trade profitably and when you choke. When you achieve such self-knowledge you will gain the confidence to trade well. Once you have developed that rock solid confidence, you’ll achieve long-term financial success.