How To Build Confidence When Trading

A while ago, we saw the following comment in The Trading Cafe from Mike.

“My biggest challenges have been not being confident in knowing how to trade well and not having many funds to invest in trading. I now have a little capital to trade with and want to learn how to do that confidently and with minimal risk.

I'm so glad that The Trading Cafe has come to my attention as I'm tired of others who expect a large fee up front before they will train you.”

The Core Problem: Confidence and Small Trading Accounts

Lets give you a very specific daily habit that’ll help fix this problem.

It’s not a hack or something you do once, it is a daily activity that requires commitment.

This daily habit is so simple that most traders dismiss it.

First, we need to understand the core issue before we can solve it.

Mike states that he has a problem with confidence when trading and a small account. 

Even if he had the confidence to trade profitably, he wouldn’t have the funds to live off trading. 

Understandably, your aim is to get to an account size that can support your lifestyle.

However, this can lead to two problems:

• Overtrading, you are taking too many trades.

• Too much risk per trade.

Unfortunately, overtrading causes your win rate to plummet. Even if you control your risk, your account will die from a thousand papercuts.

How Overtrading and Risky Strategies Affect Your Trading

However, usually, the opposite happens, and you end up increasing your risk. You want to make up for the losses, but there’s something bigger at play.

Here’s what happens. You do the math (again).

The math shows you that you need to be making 10-30% per month return to live off your trading one way.

Your small account means you need astronomical returns. Returns that social media promises you are possible.

This is what caused the overtrading and too much risk to begin with.

You think that you’ve spotted the problem. It’s the strategy. You simply need a better strategy that has a higher rate of return.

You saw some person post about a trading hack that allows for a much better win rate.

You buy another program or watch a hundred hours of YouTube videos.

Three months down the line, the cycle repeats itself. You try to make too much money from the strategy, you overtrade, and you risk too much.

Before you know it, you have repeated the same cycle for years.

You finally stop blaming the strategies. At this point, you blame the industry and yourself.

“The industry is full of scammers”

And…

“I am my own worst enemy. If only I stick to the rules”.

You find yourself in this weird hell where you feel both duped and inadequate. It’s awful.

What makes it worse is that there are a million traders confirming that the industry is full of scammers and that you are your own worst enemy.

You start wondering if anyone is genuinely making money in the markets.

When you are in this place, it makes it nearly impossible to trade profitably. Your trust in everything you read online has all but evaporated. Having confidence in anything becomes unbelievably difficult. An insurmountable barrier.

However, you push on. You keep clicking on ads, videos, and telegram chats.

You're not a “quitter” after all.

And now you are here, in the same place you were dozens of times before.

Granted, not everyone’s story is exactly the same, but it is important to recognize it before you can fix the problem.

The Solution: Structured Education for Confidence in Trading

So what do you do? How do you gain the confidence that you’ve lost?

The answer lies in structured education.

Here’s a very simplified way of how it works.

• Knowledge - learn an individual component of a skill e.g. W or M tops.

• Practice - use this component over and over again until it’s second nature. Don’t use real money.

• Questions and Feedback - Get feedback on how you are using this component.

• Barriers - identify the new barriers (most likely a new component e.g. engulfing candles).

• The cycle repeats until you know the entire method.

But where do you start? What’s the very first piece of knowledge you should acquire?

The answer: The most practical, simplest, and readily used component of a trading method.

We will divulge the very first thing Academy Students learn to help kickstart the process.

We want you to start implementing this in your trading right away.

The Skill: Posting Trade Setups

Here’s why.

Bobby (one of our Academy members) wrote the following post. It’s long but read the whole thing. See how it’s improved his confidence levels:

Basically, posting trade setups correctly has “settled his mind”. This has eliminated two specific problems for him that relate to being a “fearful trader”.

1. Taking a loss: Randomly getting out of trades early when they look bad (breaking the rules).

2. Cutting profits short: Getting out of profitable trades on a pullback and slashing his profits (again, breaking the rules).

When you settle your own mind, you will most likely solve whatever problems you are facing. They could be the same as Bobby’s or slightly different.  Either way, what’s Bobby doing to “settle his mind”? 

He’s posting setups like this:

It follows this structure:

1. Correct title: Month + Ticker + Long/short + Strategy.

2. Chart screenshot with analysis markings.

3. Entry point.

4. Stop Loss.

5. Exit (Take Profit).

6. Comprehensive analysis, including why you’re taking the trade, the good and the bad of the trade. Ensure that you're intentional with what you write and you focus on helping and teaching the wider community.  

How to Improve Your Trading with a Simple Habit

Do this every day for a month and watch how your trading vastly improves.

Your confidence will increase, and you will notice a positive change.

Don’t even bother trading a demo account. Simply post your setups and keep a record of what happens to them in a spreadsheet.

Focus on learning the skill of posting trade setups. Not the trades themselves. Don’t worry about losing or winning. That comes later.

Worry only about how you are writing them up.

That’s how you become successful. One component and skill at a time. Extreme focus on the structure, allowing you to learn the right things in the right order.

Forget about your small account. You are putting the cart before the horse.

Once you can trade profitably (2-3% per month), you can get funded and use other people’s money to build. The leverage comes from huge accounts, not from risking huge amounts of your own money.

P.S. Get our book, Six Figures From Scratch: It’s about the astonishing science behind everyday men and how they got to 6-figure accounts from nothing. It includes their strategies, 65 chart patterns you can trade, 47 indicators you can use to confirm your trading decisions, and a bunch more.