How do I regain my trading confidence?

BellaMike Bellafiore's (Bella's) Blogs3 Comments

Hi Mike,

I think it’s crazy (in a great way) that a successful trader/prop firm manager/author still takes time to answer random question from traders… Thanks so much for considering responding to mine.

First, a bit of background so you know where I’m coming from. I started trading at the beginning of 2004 at a prop firm in Chicago that specialized in intraday stock trading, much like SMB. However, the training was minimal (1 week of classes, 2 of simulator with virtually no oversight, and sat next to a veteran) rather than the ongoing support SMB provides to its traders. I had promise from the beginning, was gross positive from the start, though I sometimes tended to overtrade. Was the first in my incoming class of 8 to have a $1000 day and the only one still there after a year, but I sometimes had more red days than others, especially when the market was slow. Long story short, I left after 3 years having covered my 2k a month draw but made little on top of that because I just needed to start making money to live on. I then went to work as an analyst for (XXXX) and became a trader on their trader product. I also traded on the side with some money I was given by my grandfather. Luckily, the market became excellent for my style of trading in the back half of 2007 and became downright amazing in 2008 and I blossomed as a trader and made significant money. I left briefing to focus full-time on my trading at the beginning of 2011. My profits continued with the usual setbacks until the beginning of October of 2011, which not-coincidentally was the low in stocks for 2011. When that happened, I was up about 1.2 million for the year and by the beginning of December I’d given back 1/3 of that and stopped for the year. It was still my best year trading, but I found myself in a very negative mental place because I lost that money by overtrading and making poor decisions

Now I find myself losing money again at the start of 2012 and haven’t found any kind of rhythm or flow with the market. I haven’t been this frustrated since 2006, when I left the prop firm. I’ve had setbacks before and confidence blips, but this is an oder of magnitude greater than what I’ve experienced before. I know I do best in emotional trading environments, (I crushed silver futures last year) but I find myself unable to simply wait for a better environment because I’m sitting at home with nothing to occupy my time except for trading and nobody else to help hold me accountable for poor trading. I’m in a bad mental place and the market doesn’t mesh with my style right now, but I already took a month-long break. My question in it’s most basic form is this, Will you talk about the time when you had the biggest “crisis of confidence” regarding your trading and how you got through it? It think just hearing that story might help me overcome some of my newfound trading problems related to confidence and conviction.


Confidence: Your resilience in the face of disappointment- Dr. Andrew Menaker

I wrote about this in One Good Trade. Check out page 313 and my experience in 2001. Essentially, I took a break. Every year I think this is the end. And then I do some thought and research.  I condense my playbook to my better trades and rebuild my confidence and PnL. Much of trading is taking the time to understand your best plays in the current market, finding more of them and trading them with more size. So I ask: what are your best plays in this current market?

Most experienced traders, who have known trading success and then like the trader above struggle, use plays that have stopped working in the current market.   All experienced traders go through periods of struggle and self-doubt.  I know one high level trader who seems almost distraught for months of every year before he runs into his next good streak.  I work with one trader who if he fights the trend could finish every month decidedly negative instead of his normal positive.

Thxs for reaching out.  Congratulations on your trading success.  If you made money in the past you can going forward.  I have no doubt of that. It’s the guys who have never make money and just think a simple change here and there will make all the difference that I worry about.

I hope that helps.


One Good Trade

3 Comments on “How do I regain my trading confidence?”

  1. Sounds like this trader is very short oriented like myself. I still find many opportunities on the short side each day but more patience is required and selectivity. This tape is tough for shorts without great discipline. Shoot me an email if you like and we’ll talk. 

  2. “I’m sitting at home with nothing to occupy my time except for trading and nobody else to help hold me accountable for poor trading”

    I would say this can be a big problem from trade from home traders, me begin one of them. Sometimes you take setups that are not good just because you are bored to death. How I try to resolve this issues somewhere mid last year is to start thinking in the following terms.I’m trader employed by my kids, to trade best as I can. My kids are my CEOs and they will benefit today and in future from my good trading ideas and proper trading discipline today. If I don’t trade well I will disappoint my kids.

    Must say it helped a lot. Because you don’t have boss to seat and check your trades in your home, just go and look for someone who is important to you that you trust and start becoming accountable to him. Even if it your dog.

  3. I’ve been trading for 5 years and invest considerable time each and every day in my education and trading and still aren’t consistently profitable. I’d love to work for a trading firm but IT is my background and I’ve a family to feed and no qualifications to offer a trading firm so essentially I’m a sole trader. I consider Steve Palmquist, Al Brooks and SMB my trading mentors. I feel like this at times. I guess it’s mostly faith that gets me through and the feeling of making some positive progress. If I can get there by 10 years I’ll be the happiest man alive. You’ve been consistently profitable and then some. As Mike said you know you can do it. 

    Last year I decided I was becoming too obsessed with Trading and looked to split my time with trying to put together a web business. As I started this up and scaled back my trading time I realised after a couple of months I really had no passion for business, trading was my passion. I focused back to trading completely reinvigorated and fresh. I also reviewed my style in depth, determined 2010 & 2011 was a really flat and crappy market (especially in Australia) and changed my style utilizing Bollinger bands and price action reversals on the band, trading shorter time frames and exiting on the opposite band (channel trading). This style trading happens to fit my personality to a tee also. Adjusting my style and the temporary distraction made a huge difference both to my results and to my motivation.

    I would suggest finding a hobby to occupy some of your time and thoughts whether it be golf, model airplanes, dancing, gardening, art, martial arts whatever and examining your good trades as Bella suggests. If you don’t have these types of activities in your life then frankly why is life even worth living? Clearly you have the money. 

    I know people talk about examining your good and bad trades (I keep some pictures of each on my wall in constant sight) but I find examining the successful trades really helps to reconfirm what works and regain focus.

    All the best to you. There’s nothing worse than a person with talent not using that talent, don’t chuck it in 🙂

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