Have you ever had a poor trade shatter your confidence?

If so, join the club. Every trader experiences a lack of confidence at one point or another. I think it’s almost a rite of passage in the markets.

If you’ve been following my recent alerts, you’ll know that I took a loss on Tesla Inc. (NASDAQ: TSLA) puts yesterday. 

It was tough. But it reminded me of how important trading confidence is … and how fragile it can be at times.

If you can’t quickly bounce back from your demoralizing losses, you’re never gonna become a consistently winning trader.

Take me as an example … It took me over a decade to make $1 million in the stock market. 

The journey was long and challenging (and I took a lot of brutal losses). But I never allowed my confidence to get destroyed. 

Now, just a few years after hitting the millionaire milestone, I’ve exponentially grown my account to over $3.5 million! 

Confidence was the key to my initial success. And it’s also what’s allowed me to grow my account so dramatically over the past several years.

With that in mind, let’s discuss how critical trading confidence is. We’ll also go over the five simple steps I suggest to build your confidence back up if you lose it…

The Importance of Trading Confidence

If you want to find any consistency in trading, you MUST have the right mindset. And a big part of a solid mindset is confidence.

Confidence helps you stay focused on what matters. It also helps you make appropriate decisions in the moment. 

Confidence gives you a firm footing in your beliefs and enables you to act swiftly. It also helps you get back up on the horse when you get knocked on your butt, so to speak.

All that’s great … However, confidence can be fragile. A string of losses (or even a personal life event) can damage a trader’s confidence. 

And if you don’t nurture it, your confidence can vanish. I’ve seen traders go from arrogant know-it-alls to humbled losers in a few short months — all due to a loss of overall confidence. 

So how can you avoid such a fate? And what do you do when you feel your confidence start to wane? 

Here are five simple steps that have helped me stay confident throughout my trading journey…

Step #1: Get a Big-Picture View

If you’re experiencing a lack of confidence … remind yourself of why you started your trading journey. 

What’s your ultimate goal? Why are you trading in the first place?

The stock market isn’t for the faint of heart. There’s gotta be a reason why you go through the pain.

This broader perspective is important. It should remind you that you have a destination. Road bumps just come with the trek. 

A few mistakes — even big ones — shouldn’t change your long-term trajectory.

Remember the big picture on your path and accept that your path won’t be straight. You’ll have many ups and downs … You’ll make mistakes along the way. Find several ways to remind you of what’s important — your goals.

Step #2: Remember What Got You Here

What do you do when you’re confused and don’t know what to do?

The answer’s easy: Go back to what you know.

There’s a reason you’ve made it this far, and you’ll need to focus on what will keep you moving forward to your ultimate goal.

In other words, be specific in examining the patterns you’re trading.

And remember the age-old lesson … If it ain’t broke, don’t fix it!

Step #3: Stick to Your Trading Plan

Once you determine the patterns and setups that have been working for you, stick with them.

Whether that’s focusing on supernovas, buying basic breakouts, or shorting reversals … determine what’s worked in the past for you and continue to trade those setups.

When you lose confidence, it’s not the time to get fancy and experiment. Instead, go back to rebuilding on a tried-and-true foundation. 

Cut out all the fat and go bare bones.

You’ll always be tempted to veer away from your bread-and-butter setups … But keeping your process simple can help prevent you from going astray.

Step #4: Shape Up Your System

Start building and maintaining discipline with a solid system for your process. That can help you build repeatable processes you can do over and over.

Your goal is to get back to the patterns that you’ve had the most success with.

Speaking of success … I love watching basketball, and my favorite team is the San Antonio Spurs. 

I think they have a great organized system, which is why they’ve won so many championships. 

When their players play within that system, it sparks their chemistry. That makes them very hard to beat.

Think about how you can find that kind of harmony in your trading.

Step #5: Find Consistency

Once you build the system that works for you, keep repeating the steps until you build good habits.

The important thing is that you follow the process and build momentum as you get wins under your belt.

If you want to find any consistency in trading, you have to have the right mindset, which includes plenty of confidence.

Don’t take your confidence for granted … You can lose it, so remember to nurture it.

Final Thoughts

Trading the stock market isn’t easy. You’ll have many times in your journey when you’ll get your butt handed to you. That can dent your confidence, and that’s not a fun or easy experience.

The good news is that you can fight your way back to become a better and more confident trader.

If your trading hits a rough patch, try working through these steps. Even if you only focus on one good setup, it’s a step in the right direction to building yourself up again.

Once you get consistency, you can find a renewed belief in yourself. Then you can consider adding more setups to your process.