Confidence and Money Management

Most people are used to having a paycheck, or having production schedules, or income projections based on population growth. When you start trading, though, whatever you used as a benchmark is gone. Sayonara. In the end though, those were just guesses too.

Following a process while trading will give you confidence- a crutch, if you will – in your long term success just like your old estimates of savings growth did. Over time, your long-term anxiety will go down and your confidence in the process will be built up. All you have to do is follow the steps.

Eventually, you'll learn to trust yourself. This comes from the hard work of doing retracements on old data, or live trading in a demo account. You don't get that confidence from trading on paper, and you especially dont get it from doing it just in your head. Trust in yourself in this fashion will allow you to act in your own favor. Your trades will become both quicker, and more profitable.

Managing your money, and managing your risk are your number 1 priorities- not your patterns, luck, or ego. There's an old saying among commodity traders: Take care of the losses, and the profits will take care of themselves. This is a process of making money, not of being right or wrong. It's not a mistake to be wrong... It's a mistake to stay wrong, and lose money.

Never expose yourself to unlimited risk by not placing a stop. A stop protects you from yourself. When you get scared, you'll start to get tunnel vision- you may start to fool yourself and do really stupid stuff. A good example of this is when your ability to make decisions is compromised(Like when the market scares the piss out of you by reversing on a new position).

Over time, if you develop your discipline, you will be able to keep your focus on your investment plan. And your focus will be kept away from the conflict and conditions of the market.