 Welcome back to the Trade Hacker Mindset. In this episode, I want to talk to you about your trading confidence. Trading the markets can be difficult to master and seemingly just out of reach. Professional traders have a secret. Trading requires total mental and emotional control. It requires the Trade Hacker Mindset. All right, so let's jump into this discussion of trading confidence. So part of my thought around this came from this weekend for those of you who've been following for a while. I coached one of my son's baseball teams and had a tournament this weekend, like we do basically every weekend from April through the 4th of July. And one thing that's been happening with my son specifically is he has been losing his confidence when he goes up to the plate to hit. And you can tell that he's losing his confidence because he is swinging way out in front of the pitch. Like he's so anxious and he's so tense that he's swinging a foot two feet, three feet before the ball even gets there. The other thing that I noticed he did a couple times this weekend was he didn't make a full swing. Like he wasn't confident enough in his swing so he kinda half swung, hit the ball and it ended up being more like a bunt than an actual hit. So the ball just kinda squirts down the line. Now the good thing is he's one of the fastest kids for his age and so he was able to run it out and get on base. But the point is his confidence at the plate has just gone just downhill this year. His mechanics of his swing have gotten better. He's gotten private lessons from very high level coaches and people who know their stuff about hitting. So you can just tell when he's hitting off a tee, when you're doing soft toss, when we're hitting off the machine in practice, I mean his swing looks good but it's all between the ears. It's all when he gets up to the plate in a game, his confidence, it's like he just gets so tense and it's like the game's too fast for him right now. Now on the flip side of that, he plays center field and he's a pitcher and so he also pitched in the game. So the same game where he's showing this extreme lack of confidence when he's batting, he's also showing extreme relaxation and confidence when he's on the mound pitching. Like you can just tell in his body language as he steps on the bump before he throws a pitch that he's extremely comfortable and confident. And you can tell because he's firing in strikes, he's, you can see the emotion in his body is when he does something good, you can see the confidence build. Even when somebody gets a hit, he just kind of shakes it off. And so my point of telling you about my son's baseball confidence in his playing is because it translates very similar to trading. How so? Here's how. So I see it all the time. I have the benefit of watching and chatting and emailing and talking to traders on a daily basis. And I see the same thing over and over where you get someone who maybe they've taken a string of losses or maybe they're newer and they were doing good and all of a sudden they're not doing as good. And so you can tell that their confidence is a little bit shaken. And I see this in the day trading more than anything else. But it's the same thing of like my son kind of taking a half swing. The way that I look at that in trading is somebody taking profits too early. Or somebody jumping in a strategy and jumping to another strategy very quickly. They're just not confident in that strategy. Now how do you get confidence in a strategy? Well, we always suggest that people paper trade that strategy at least 100 times before they ever risk any real capital. If you don't take the time to test a strategy work through all the nuances because there's only so much that I can do possibly can in a video and walk you step by step through how I do it. But there's certain things that I have in my mind as I'm placing the trade that I just don't even think of when I'm teaching. So there's, and that's why I always talk about the nuances. There are so many nuances in trading because there are all these little things that you can't teach in a video that the only way you can learn how to do it is by actually placing the trades. Just like I always use the golf analogy. You can't watch a bunch of golf videos and go out and shoot par on a course, right? You have to get out there and swing the club and swing the club and work out the kinks and figure out the little angles and everything else to get you to be a solid golfer. So I've mentioned on the podcast previously in a previous episode that I ended up hiring a trading psychologist a while back. And one of the things that the trading psychologist had me do was to take the different strategy or strategies that I trade and I had to go back in time to a period on a chart in the timeframe that I traded and a period that I couldn't try to figure out what the market did during that period but just kind of a random period where I didn't know it was gonna happen. And I had to go candle by candle through the chart and mark those charts on what I would have done. So it's kind of a form of back testing but you're actually doing simulation trading and there's a lot of platforms. Thinkorswim has simulated trading where you can pick out a date range and just go through and take trades as if it was a live market and you can fast forward through it. And there are a lot of other kind of simulation trading things like that. Ninja trader has a good one. Trading view has a good one. So there's all different ones. So I've done that a ton in the past. I've been trading for 20 years and so in my early years in trade I would do that all the time. I would spend hours and hours and hours simulation trading, looking at charts, looking at patterns. I mean, there were times where I would fall asleep at my desk because I was just going through pouring through charts and kind of doing simulation trading and trying to work through those things. And so when you do that, what happens is you do start to work out these nuances. You do start to work out these kinks. You do start to figure out things like another thing that you figure out that builds confidence is what's the most comfortable strategy or what's the most comfortable timeframe or what's the most comfortable symbols for you to trade? If you are trading a five minute chart and it's moving fast and you're having to get in and out and it's a very fast paced type of trading and you don't have confidence in that but when you're trading more of a swing trade, when you're trading off a daily chart and you're doing kind of a similar strategy but just a different timeframe, though just that little thing can be a huge shift in your confidence. So if that's the case, you have a couple options. Number one, you can continue to do this testing and simulation trading and trading super small on the five minute chart to work out your kinks and work out your issues and become more confident in the strategy with that timeframe. Or you can stop trading it. You have total control. You could only trade off of the daily where you're confident and you're consistent and you don't have the emotional swings and maybe you're more profitable and it just feels better for your personality than there's nothing that says you have to trade on a five minute chart. Sometimes we, in other aspects of life, we think that hard work doing more, doing more is what gets us more successful but in trading, a lot of times it's doing less. You don't have to be putting on a trade all the time in and out each and every day to be profitable. In fact, less people are profitable day trading than they are swing trading. And so getting back to the whole confidence thing, one of the reasons that is obvious in my son's batting appearances of why he, I can tell he's not confident is you can just see his body language. You can just see how tense he is. It's almost like he's trying to choke that bat when he's up there because he's so, he's trying to press, right? He's so anxious. He wants to do good, so bad. He's trying so hard that it's backfiring on him, okay? And the same thing happens in trading. Whether you realize it or not, when you have a bad trade or a losing trade or some type of trade that goes against you, your body physically tightens up. And one thing I kind of realized is for me, it was my chest. I would start, when I really became self-aware and started saying things out loud and writing things down and documenting my actual how I felt in different trades, I would physically start to realize that my chest would start to tighten up. And so it's not just a mental thing. It's not just an emotional thing when we're trading. It actually has a physical reaction in your body when you are taking trades and you're not comfortable. So some things that I do about that, and I've talked about this before, but I think it's worth repeating because the more times I can repeat it, the more different ways that I can say it, if it reaches just one of you to a point where you have a little bit of an aha moment and it can kind of help propel you or kind of shift you up to that next level of trading, then it's worth it for me. And so one thing that I do is I started doing, before the market opens, I do kind of a breathing exercise. And when I first started, I've tried meditating in the back in the past and I just, I was always, I was just like, I'm just not good at this meditation thing. I just couldn't do it. I couldn't focus that long. Maybe it was my ADD, maybe, I don't know what. But anyway, but I've always heard and really kind of known that there are some major benefits to meditating. And so what I did is I got kind of on this little program that kind of helped me kind of incrementally do it. Basically, long story short of what it was is I started doing it for three minutes. So for three minutes, I just sat in this office away from my screen and I closed my eyes and I breathed in deep breath in through the nose, pause out through the mouth. And the only thing that you are thinking about during this three minute exercise is your breath. So you're feeling the sensation of the air coming into your nostrils and maybe your nostril hair is kind of wiggling and a little bit of a burning sensation as you pull the air in and then the release of the air coming out of your body and feeling the shift from your chest all the way down to your stomach and all that. And so you're really just focused on the breath and the feelings and thoughts that you get around the breath. Anytime your mind starts to wander and you catch yourself, you gotta bring it back to the breath. So I do three minutes and then every day I increase that by 30 seconds. To the point now where I'm doing it, I usually do it between 15 and 20 minutes and I do this before the market opens. And what this does for me is it really kind of creates space in your mind, okay? It sometimes a lot of people come into work or they come in when the market opens on Monday and they're kind of anxious, right? A, they're excited about getting back in or they're a little bit anxious about some losses that they've taken recently and they gotta try to get that money back or who knows, there's a variety of reasons, right? So it's not just Mondays, but sometimes you just come in on a day and you have different little issues. Maybe you had some issues in your personal life or you had some issues in some other work area of your life and you just have these different issues pressing and pulling and it creates some anxiety within your body, even if you don't know it, even maybe it's on a subconscious level. And so what this does, this breathing exercise does is it kind of pushes all that out. It almost takes it out of your body and pushes it out in front of you so that you can be above it looking down on it, okay? So it's no longer a part of you, it's just something that you see. So it's creating this space between you and all these other things. And I gotta tell you guys, it's amazing how much that does for you on a daily basis. And what I mean by what it does for you is the whole topic of what I'm talking about here. It creates confidence. It creates confidence in my trading. It creates confidence in my conversations with other people. It creates confidence in every other aspect of my life, which all filters over to trading since a lot of my life is about trading. So I know everyone listening is on a different point in their trading journey. And I think for a lot of people, you start out and it's all about obviously learning just the jargon and the symbols and the platforms and just some of that basic stuff. And then you move on and you try different strategies and you're jumping from strategies to strategies and you're trying to find which one is the best strategy in air quotes. And that's important because you do have to find the strategy, A, that's like I was talking about the best for your personality. And there's also a lot of bad trading strategies out there. So you've got to find somebody who, you know, doesn't kind of cuts through the BS and actually shows you strategies that work. But once you get to that point, that's all you really need to have from a trading knowledge standpoint. And what keeps so many people back from moving on to success in trading is they keep jumping from strategy to strategy because they think that's the problem. And it's not until you look internally at yourself and your mindset around trading that you can actually take yourself to that next level. And when I say mindset, it all comes down to confidence. Okay, a lot of what you're doing is confidence. We had a web class with Rich Friesen who was on the podcast a few episodes ago. And he talked about his mind metrics methodology and it's basically this sheet that he created that helps you document when you're taking, you know, how you're feeling on specific trades. There's a whole bunch of stuff. You can go back and watch the recording. But it's the sheet that he's created to quantify your trading behaviors. And so you're essentially going through and you're marking on the sheet, you know, all your different feelings and there's some dropdown boxes. He's made it very easy and they're color coded to help you determine on that specific trade. Did you follow your rules? How did you feel? And if everything was good, then that is a, that's everything's marked off on the positive side, right? And then on the opposite if, and it's called a lucrative trade. So regardless of how much money it made, if you followed all your rules and you felt good and confident and everything checked off, then you then you market a positive box and that's considered a lucrative trade. Then on the flip side of that, he has, you know, you talk about your trade and what happened and did you follow every rule step by step? And if not, it's categorized differently. It ends up being categorized as what he calls a lousy trade. Okay, so you get your lucrative trades and your lousy trades. And what's amazing that he talked about and I've been doing it myself. And what's amazing is there's a very direct correlation between the lucrative trades and good P&L. Okay, and as you can imagine, those trades where you didn't follow the rules or you didn't do, or you position sized up or you didn't do something you were supposed to do, those lousy trades, there's a direct correlation between those and your negative P&Ls on your trades, okay? And so one thing that this does in addition to just making you self aware and documenting and journaling your trading which would tell you over and over and over and over to do, in addition to that is what this does is it builds confidence, okay? It builds confidence so that you have very well laid out documented and you can go back and look at it to understand what you did in these trades. And when you understand what you are doing that's making your trade successful, that builds confidence. And the more confidence you have, the better you keep doing, the more you keep growing. Now you can scale up your position size. Now you're starting to hit these profit levels that you never thought possible. And it's a snowball effect that continues but it all started with your confidence. So I've kind of been jumping around here. So what are the steps that you need to take to build the confidence? Well, number one, if you haven't done it, if you've just jumped into one of our strategies, let's say you've jumped into one of our strategies at navigation trading and you're just kind of taking our word for it that it's a good strategy, which they are. We've done all the backend, we've done a lot of testing, we've done the real life trading, we show the results, all that stuff. But guess what? Guess what that did? That built my confidence, okay? I did that not only for you because I want to make sure that I'm not putting out BS material to you all but I have to do that for my own confidence because everything that I teach, I do. Everything that I teach, every strategy I teach, I trade, okay? So, but you still have to do it for yourself because even though I have the confidence in the strategies that we teach, if you start trading those and you go through a drawdown because no trading strategy is 100% profitable, if you haven't done the testing for yourself means you don't have the confidence yourself because who am I, right? I could be another one of those charlatans online that's just feeding you BS, right? I mean, you don't know that, you don't know me that well. And so, if you don't go through that process of understanding the strategy, testing the strategy, what's gonna happen is when you go through your first drawdown, when you start to lose money, when you have a little bit of a string of losers with that strategy, guess what you're gonna do? You're gonna say, oh, that was just a, he was just trying to sell me something. That was just BS, I lost money, never should have done it and now you're gonna go looking for the next strategy. Well, guess what? Not necessarily the strategy was bad, it was your confidence. You didn't go through the process to understand the strategy and test it and understand when it does bad and when it does good and what environments are best and what environments are worse and why it had that losing streak. Instead, you're jumping to the next strategy when in fact, if you would have just taken the time to build your confidence in that strategy and understand it and document the nuances as you went through the process of learning that strategy, you could turn that into a very successful situation. So number one, you've got to test and understand the strategy. Number two, you have to have a method for documenting your trades and your emotions. So we talked about a trading mindset journal, we've talked about just a trading journal. You've got Rich Friesen's Mind Metrics which is a fantastic, instead of trying to reinvent the wheel with your own thing, I mean, that's just something that he has very step-by-step criteria he built a very successful trading business on the Pacific Exchange with that exact methodology. So if you don't want to reinvent the wheel, it's all there for you. It's all there step-by-step. You can kind of plug and play, push it in and get started that way. So those are the main things. Back test yourself, understand and learn the strategy, build the confidence in that strategy, understand it when it works, when it doesn't have a trading journal, a mindset journal or some type of documentation and continue to practice. And I'll throw in there the breathing exercise because I think that is so important. I know a lot of people, like I was, very resistant to it at first. Just don't say no, that's all I'm saying. Don't say no, maybe just try it, maybe think about it and it'll change a lot for you. So hope this was helpful. If you want to be part of our community, you can go to community.navigationtrading.com. It's free to join, we have hundreds of traders interacting on a daily basis, not only about the mindset stuff, but sharing trade ideas with the sole purpose of helping each other become better traders. I hope to see you on the inside and I'll see you in the next episode.