How to Build Confidence in Trading With a Winning Mindset

Introduction to Developing a Confident Trading Mindset

It is a sad fact that most people who enter the world of online trading will lose their trading capital in a very short space of time. There are plenty of factors that contribute to this like:

  • Unrealistic expectations.
  • Lack of proper trading education.
  • Lack of a robust trading strategy.
  • Risking too much money etc.

I can go on and on about what causes such a high percentage of traders to fail but these factors are the main culprits. It seems that most traders i.e. the average Joe, follow the same path when they first start trading which includes:

  • Wanting to make additional money (I hate my job).
  • Performing online searches on how to do this (Google answers everything).
  • Trading online looks like a great opportunity (Quick money for little effort).
  • Taking an online course (Now I’m ready to make some cash!).
  • Opening a brokerage account (Any broker will do).
  • Trading (first trade was profitable – this is easy!).
  • Gambling (start losing more than winning – I can trade myself out of this!).
  • Account has blown up (This trading stuff does not work).
  • Anger, fear, and denial (Quit trading).

Sound familiar? Trading can be both emotionally and financially taxing. I believe that the amount of garbage that gets advertised online with regards to trading and how easy it is etc. should take a lot of the blame BUT this is not the intent of this article. Instead, the intent is to man up about your past experiences, accept responsibility and improve your trading mindset once again.

Developing a Confident Trading Mindset

A lot has been said about the importance of trading psychology and the crucial role that it plays in your success as a trader, and although I fully agree with it, I think the first important step should be to find a winning strategy first. How is trading psychology going to help you when you start off with a strategy that does not even stand a chance of being profitable in the first place?

I personally think that the first crucial step in any novice trader’s success is to first find a winning strategy that will take a trader through the following phases:

  1. Learning and applying (studying and proving the concepts to yourself).
  2. Testing and documenting (applying in the simulated account and noting performance).
  3. Gaining confidence in your strategy (trusting your strategy, seeing positive results).
  4. Trading with real money (trading psychology and discipline).
  5. Treating trading as a business (this is not gambling).

The road to success therefore first starts with a decent strategy that builds confidence for a trader when they see it works and builds trust not only in what the strategy is capable of but what a trader is capable of when they execute their strategy with no fear.

Sometimes it can be difficult to change old habits and rebuild one’s confidence but what I will show you next is how I follow a strategy I developed myself that took me through those very same 5 phases that rewired my broken confidence into something that I now trust and have lasting success with.

Confidence Building Strategy

What follows next will be an overview of the procedures I follow that are aimed at achieving one specific goal:

Finding the end of corrections and entering low-risk trades when the trend resumes again.

My goal may sound easy but to achieve that goal I break it down into smaller manageable steps:

  1. Determining a trend or when a trend may end.
  2. Finding areas or levels where a correction may occur.
  3. Confirmation of a correction.
  4. Using market geometry to find the most likely area where a correction could end.
  5. Following a set of entry conditions to signal a trading opportunity.
  6. Entering low-risk trades with large profit potential.

Using a real-life trade example will clarify my strategy better and explain the steps I follow to confidently achieve my primary goal.

  1. Determine trend

how to build confidence in trading

Using a simple set of trend lines I was able to determine that the USD/CAD Forex pair might be in the beginning phases of a trend change, or at the very least getting ready to re-test the highs made in December last year. This simple approach changed my bias to the long side which meant that I would only take long positions when the opportunity presents itself.

  1. Finding areas where corrections may appear

developing a confident trading mindset

Next, I used my Fibonacci extension tool and anchored it to swings within this current upward move. The black box indicated that I had to use swings that were part of a certain type of correction, which would require that I use those pivots to accurately draw my extension ratios.

Price reached and reacted from the 100% Fib extension multiple times, indicating some sort of correction downwards.

  1. Correction Confirmation

improve your trading mindset

The first time I actually looked at this chart was on the 13th February 2018 and I decided that a trading opportunity was on the cards if my 4 hour chart were to confirm a correction. An additional thing that made me excited was that the 4-hour chart also had trend lines that were broken to the upside.

How To Build Confidence In Trading

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  1. Find the end of the correction

how to build confidence in trading

The chart above was the actual chart I was looking at on the 13th Feb and on it I drew a Schiff pitchfork which is a tool I use to find the end of my corrections. Note how I also identified a price zone where I thought the correction would end, ahead of time.

developing a confident trading mindset

Two days later on the 15th of February market structure developed in a different way than I anticipated so I had to readjust my pitchfork and update the price zone I thought the correction would end at.

  1. Entry conditions and setup

improve your trading mindset

On the 16th of February, the price touched down in my price zone and right at the lower red warning line of my pitchfork. It was then time to look for an entry.

how to build confidence in trading

Using a much smaller time frame I looked for a few entry conditions that would signal an entry. I had momentum on my MACD histogram slowing down, a touch of my red warning line, and a bullish reversal pattern signaling that I needed to place an entry order slightly above the reversal pattern with a stop-loss order slightly below.

These entry conditions were developed by myself to weed out the bad setups from the good ones and they have often kept me out of losing trades. This simple set of entry conditions also help with my confidence because I know that when all my conditions are there that the probability of this trade working out has increased massively.

Where I place my stop loss is part of my strategy and I know exactly where to put it before I take a trade and never touch it until it’s time to trail my stop. If I get stopped out, that’s fine because my risk is always small and I accept the risk involved before I trade.

  1. Low-risk trades and large profit

developing a confident trading mindset

Using a combination of multiple time frame analyses, market geometry and the use of entry conditions allows me to take trades that have very little risk with large profit potential. When I trade I set my ultimate target at a level from where the entire correction started from or slightly above it. I also actively manage my open trade by taking partial profits at important areas and trail my stop using my pitchfork tool as a guide.

My target is therefore based on a larger time frame which allows me to aim for big rewards. It can be nail-biting stuff to wait out a trade with such a big target but the more times you actually get to experience the fact that you nailed an exact bottom/top of a correction and see price reach your final target is a fantastic experience which once again builds confidence in your strategy and your ability as a trader to execute your strategy.

Trade Outcome

improve your trading mindset

This trade has already gone 384+ ticks in my favor while only risking 13 odd ticks. I still have a portion of my trade open and trailed my stop loss to an appropriate position. Look at how minuscule that stop loss was in relation to where I took my entry. If this sort of trade is not a confidence booster then I do not know what will change your mind.

Developing a Confident Trading Mindset – Recap

If your confidence in yourself or your strategy has been broken then perhaps it’s time to fix it by starting over with a decent strategy as a basis and going through the previously mentioned phases:

  1. Learning and applying (studying and proving the concepts to yourself).
  2. Testing and documenting (applied simulated account and noting performance).
  3. Gaining confidence in your strategy (trusting your strategy, seeing positive results).
  4. Trading with real money (trading psychology and discipline).
  5. Treating trading as a business (this is not gambling).

Trading successfully requires dedication and time to prove a strategy’s worth to yourself. Following the phases above will install confidence again before you even start trading with real money again. Educate yourself, apply yourself, gain confidence and only then risk real money while treating trading as a serious business.


Developing a confident trading mindset is what my strategy is all about and I have given you some tips on how to build confidence in trading. If you ever wondered what it takes to be a more successful confident trader then be sure to check out my course here.

I hope you enjoyed what I have shown you and that you will consider taking the steps necessary to improve your trading mindset. Find a good strategy and go through the phases necessary to get you back on track and on the road to trading success.

Until next time

All the best

Richard K


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