The Confident Trader

Sunday, July 9 Leave a Comment

Rahul  tells his friend, "I'm staying out of the markets for a few days."
"Why?" asks Raman.
"I can't trade under these conditions. I'm going to wait for the markets to change," answers Rahul.
"What a lack of confidence," Raman taunts.
"Maybe, but I'd rather be safe than sorry," Rahul retorts.
Does Rahul actually have a lack of confidence? Just because Rahul doesn't want to trade under market conditions that are not suited to his method does not mean that he lacks confidence. He may be showing a sense of heightened self-awareness. It is possible that he is acknowledging that he lacks the skill to trade under current conditions and that he would rather prudently stand aside than jump impulsively into market conditions that he can't trade. Sometimes, a high level of confidence can be defined as realistically knowing what you can and cannot do. According to this definition, how confident are you?
Many people confuse true self-confidence with false self-confidence. The confusion arises when high self-confidence is equated with high levels of ability, like the popular stereotype of a skilled, seasoned trader. A seasoned, master trader knows how to trade in a variety of market conditions, and thus, has high trading ability. He or she may have both high levels of skill and confidence in that he or she has mastered a variety of market conditions


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