How to Build Confidence in Trading: The Skill That Keeps You in Winning Trades
2025-06-20 08:17:05
How to Build Confidence in Trading: The Skill That Keeps You in Winning Trades
Excerpts from the Daily Trading Coach - Lesson 29: Maximize Confidence and Stay With Your Trades
Goal of This Lesson
To train yourself to stay with winning trades not by forcing discipline, but by building the experience of trust. You’ll learn to tolerate uncertainty, anchor to your trade idea, and condition your confidence like a muscle.
“Confidence is not just a function of how you think, but also how you act.”
- Dr. Brett Steenbarger
Real-Life Analogy
Think of a weightlifter.
You don’t develop strength just by reading books on proper form. You develop it by picking up the barbell, again and again. Confidence in trading works the same way. You won’t build it by theorizing or backtesting alone. You build it by staying with the trade, by sitting through those shaky moments, by enduring the pullbacks, by lifting the emotional barbell of uncertainty.
The first time, it feels heavy. The tenth time, you handle it. The hundredth time, it becomes second nature. Confidence is not a light switch, it’s a muscle.
The Trader’s Dilemma
Most traders talk about managing risk. Few talk about managing confidence in the heat of a good trade. Yet this is where many quietly self-sabotage. Not when they're wrong. But when they’re right.
They cut winners short. Exit early. “Secure the bag,” they tell themselves. But deep down, it’s not about banking profit, it’s about avoiding discomfort.
The truth?
“Traders often think they’re managing a trade when they exit prematurely, when in fact they’re managing their thoughts and feelings about that trade.”
- Dr. Brett Steenbarger
That paper profit isn’t the threat. The real threat is how it will feel to watch it disappear. So they bail not to follow the plan, but to shield themselves from self-blame, frustration, and doubt.
What’s Really at Stake?
When you exit early and ignore your trade plan, you don’t just limit upside, you chip away at self-trust. You condition yourself to flinch in uncertainty. That becomes your default. And every early exit reinforces the belief that you can’t handle the ride.
This is the hidden cost of stop-profits:
“If you don’t act on your trade ideas… you undercut your confidence by never allowing yourself to develop trust in those ideas.”
- Dr. Brett Steenbarger
Top 3 Reasons Traders Don’t Hold Their Trades
1. Fear of Losing Unrealized Profits
As soon as a trade goes into profit, the fear of giving it back kicks in. Traders shift from thinking about the setup to obsessing over protecting the P&L.
- What’s really happening:
They're not managing the trade-they're managing the pain of seeing profits disappear.
- Underlying belief:
“If I don’t lock this in now, I’ll regret it later.”
This leads to premature exits not because the setup changed, but because the trader’s emotional threshold was breached.
2. Lack of Predefined Exit Plan (Target or Conditions)
Many traders have a stop-loss but no target. Without a clear “this is where I exit,” they end up reacting to price noise rather than following a process.
- What’s really happening:
They’re guessing. No plan = no conviction = emotional decision-making.
- Underlying belief:
“I’ll know when to get out when I feel it’s right.”
This results in inconsistent outcomes and self-doubt-because they’re relying on emotion instead of structure.
3. Low Confidence in the Setup or System
If a trader doesn’t trust the setup, they won’t stay in it-especially during pullbacks. When the price retraces, even slightly, it feels like proof the idea is wrong.
- What’s really happening:
They haven’t tested or internalized their strategy enough to believe in it when things get uncomfortable.
- Underlying belief:
“Maybe this isn’t the right trade after all…”
They bail not because the setup failed but because they lacked the confidence to sit through normal market behavior.
Root of the Problem
At the root of all these struggles is the absence of a tested and repeatable process.
Without a structured system to trust, every decision becomes emotional, every fluctuation feels personal, and every trade turns into a mental tug-of-war. Confidence can’t exist where randomness rules.
Core Principles
1. Confidence Is Built by Action, Not Just Thinking
The more you sit through planned trades, the more you prove your edge works. Of course, accompanied by your pre-defined parameters to hold.
2. Retracements Aren’t Losses-They’re Tests
Every pullback is a rep. A chance to practice patience and proof.
3. Premature Exits Are About Emotion, Not Risk
Exiting a trade early isn’t smart if it violates your plan. It’s a comfort play.
4. Trust Is the Foundation of Confidence
Just like you trust your brakes when driving, you must trust your analysis when in the market.
Actionable Approach
- Pre-Trade Routine:
- Define your stop and target. If you have a strong plan, act on it.
- Visualize the pullback. See it. Expect it. Preload your reaction.
- In-Trade Behavior:
- Let a portion run to the final target-even if it's just 25%.
- Stop watching P&L. Instead, ask: “Has the reason for this trade changed?”
- Post-Trade Coaching:
- Journal not just the outcome, but how you handled adversity.
- Reward yourself not just for profits, but for execution integrity.
Build on Small Wins
You don’t need to go all in. Steenbarger offers this idea:
“If you do just a little of the right thing, you will provide the feedback and encouragement necessary to expand those efforts.”
So don’t force yourself to ride every trade to full target. Just start small. Keep a piece. Watch it hit your zone. Do it again next time. Let the reps build.
Over time, you’ll stop asking, “Can I hold this trade?”
And start saying, “I’ve held this kind of trade before. I’ve got this.”
Reminder
Note: Of course, I’m not saying you just sit through every trade and leave money on the table.
You need specific, predefined parameters that guide your decisions-what keeps you in the trade, and what gets you out.
This is not about stubbornness. It’s about structure.
You don’t build confidence by holding blindly. You build it by holding with purpose.
Final Thought:
Every time you stay in a trade not because you feel good-but because your plan is good-you send a powerful message to yourself:
“I trust my process more than my panic.”
And that, right there, is how confident traders are made.
You don’t need more discipline, you need better processes.
Check Out My Contents:
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Complete Step-by-Step Guide to Day Trading Gold (XAU/USD) with Smart Money Concepts (SMC)
The Ultimate Guide to Backtesting and Trading Gold (XAU/USD) Using Smart Money Concepts (SMC)
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The Ultimate Guide to Understanding Market Trends and Price Action
Want to learn how to trade like the Smart Money?
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Mastering Candlestick Pattern Analysis with the SMC Strategy for Day Trading
Understanding Liquidity Sweep: How Smart Money Trades Liquidity Zones in Forex, Gold, US Indices
The SMC Playbook Series Part 4: How to Confirm Trend Reversal & Direction using SMC
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Trading Psychology and Continuous Improvement Contents:
The Mental Game of Execution - Debunking the Common Trading Psychology
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The Hidden Threat in Trading: How Performance Anxiety Sabotages Your Edge
Why You Fail in Trading: You Don’t Have Enough Capital to Survive
Why 90% of Retail Traders Fail Even with Profitable Trading Strategies
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