Senior Process Engineer
Manufacturing Plant Supervisor
Self-confidence is an essential component of success in any activity. It doesn’t matter if you’re looking to excel in sports, business or stock trading, having a winning mindset is absolutely crucial.
The opposite of self-confidence is self-doubt. And unfortunately, self-doubt is a major hurdle for many traders, especially when they’re just starting out.
So what’s the cause of self-doubt, or a lack of confidence?
Well, we usually doubt ourselves because we may be entering into an entirely new environment or taking on a new activity, and we fear making a mistake. An even stronger fear is the fear of losing.
The fact is, our current educational system punishes mistakes with a lower grade. And God forbid we get labeled a loser. Nobody wants to be known as a loser. And that’s why for many people, making a mistake or losing in some way can trigger an emotional death spiral into a pit of self-doubt and fear.
That’s why we, as traders, must learn to manage our emotions and see losses as valuable learning opportunities, rather than failures.
Most importantly, we shouldn’t personalize losses. We need to see them as a necessary part of the learning process. After all, trading is just a game. And the reality is, while playing any game, there are times when you’ll win, and other times you’ll lose.
That’s why the faster we accept the reality that we’re going to make a profit on some trades, and lose money on others, we can start to take control of the fear and anxiety all traders face from time to time.
Dario Pellegrino is a 29-year-old business owner who sells and installs carpet and flooring in Vero Beach, Florida. His goal is to the build self-confidence and trading skills he needs to make a living trading stocks full-time from home.
Vero Beach, Florida
The Trader’s Council
A common trait shared by successful investors and traders is emotional control. The truly successful ones have learned to keep the emotions of fear, anxiety, and even excitement in check while they’re making trades.
Of course, it’s possible that a successful, millionaire trader could freak out and punch some dude in the face after the guy runs into the trader’s $400,000 Lamborghini, but when that same millionaire trader sits down at his computer to execute a trade, he’s as cool and collected as a Top Gun pilot who’s about to fire a missile at an enemy MIG.
The most common way to start learning to trade is paper trading. You can also study “model” portfolios, which have been tweaked to look good on a theoretical level. Unfortunately, real-life trading doesn’t necessarily follow theoretical models.
Although paper trading is recommended for rank beginners, paper trading and putting real money on the line are never the same thing. That’s why, when it comes to trading real money, you should start on a small scale and gradually scale up the dollar amounts. Make sure to be patient and give yourself plenty of time to feel comfortable making bigger trades. Remember, Rome wasn’t built in a day, and neither is a successful trading career.
So, after paper trading for a while, start making small real-money trades. If you can’t risk $500, reduce it to $250, or maybe even $100. In other words, reduce the amount until you feel comfortable. Doing this makes “pulling the trigger” easier, and it helps you experience the real decision-making process in real-time. Increase the dollar amount of your trades slowly. This will help you gradually “stretch” your comfort zone, while managing risk.
After you’ve done that a few times, imagine yourself placing a fake paper trade that’s the same amount as your monthly salary. Then, simulate placing that trade in real time, in the real market, without pulling the trigger. Imagine doing this with real risk knowing there’s a good chance you’ll lose a full month’s salary. Take a minute to observe how you feel at this point.
If you push it to the edge and stop a second before placing the order, chances are, some serious thoughts and emotions will surface. You may find yourself thinking things like:
Damn, I worked really hard to get that money. How am I going to pay my rent or mortgage if I lose all that money? How am I going to explain to my wife/husband or partner that I just lost a whole month’s salary trading a stock?
So do yourself a favor and take a hard look at those thoughts and the emotions that come with them. Learn to manage those emotions in your mind, while you are gradually increasing the size of your real-money trades.
You need to be aware of your thoughts and emotions if you ever hope to manage them. After all, how can you manage something if you can’t see or understand it?
Consider the case of Traders Council member Dario Pellegrino. Dario is a 29-year-old business owner who sells and installs carpet and flooring for a living.
“I work hard for my money, so I’m always looking for ways to use my capital more effectively. Initially, I wanted to learn how to trade indexes and manage my risk. Davis Martin’s self-confidence and his SPY trade of the day is what originally led me to the Traders Council,” says Dario.
“I started watching Trader Council’s educational videos and sitting in on the live trading that can be found at their website, and it validated the confidence Davis had in his trading skills.”
“I wanted to learn how to trade indexes and manage risk. Davis Martin’s SPY trade of the day is what originally led me to the Traders Council.”
Because Dario had limited capital and was somewhat unsure of his trading abilities, he took a gradual approach to building his trading confidence.
“Being a member of Traders Council has given me the confidence and knowledge I needed to utilize my limited capital for more profitable trades. No home runs. Just small, base hits that have been keeping me green. I’m looking forward to the next year and plan to keep investing in myself,” he says.
Like most traders with day jobs, Dario has to find creative ways he can take advantage of spur of the moment opportunities that arise while the markets are open.
He told us about this recent trade, ”At work, I was in the middle of a 1,100-foot wood glue-down job when I heard Davis’ trade alert come through. Unfortunately, I couldn’t get to my phone fast enough, but I caught the end and made a quick $400.00.”
“At work, I was in the middle of a 1,100-foot wood glue-down job when I heard Davis’ trade alert come through. Unfortunately, I couldn’t get to my phone fast enough, but I caught the end and made a quick $400.00.”
Even though we’re taught at a young age to avoid risk and making mistakes, traders need to remember that overcoming temporary setbacks is a necessary part of learning what we need to know to be successful in the long run.
Dario understands that building trading confidence is a process, and that’s why he has committed to the process, win or lose.
In his words, “Traders Council is giving me the confidence and the opportunity to learn enough to trade full time. I’m not quite there yet, but I know I’m on the path and that success will come. Persistence is the sine qua non of success.”
By training their mind to “reframe” losses as valuable learning opportunities instead of failures, traders can keep their emotions in check so they can stay in the game long enough to see the process they’ve committed to, produce tangible results in the form of bigger gains, greater self-confidence, and long-term success.
“Traders Council is giving me the confidence and the opportunity to learn enough to trade full time. I’m not quite there yet, but I know I’m on the path and that I am success will come. Persistence is the sine qua non of success!”
Do you have a Raging Bull success story to share?
Senior Process Engineer
Manufacturing Plant Supervisor