Traders Ask: How Do I Develop Conviction?

BellaMike Bellafiore's (Bella's) Blogs, Traders Ask3 Comments

I have a question for you: Is conviction something you have to earn?? I know the question is almost rhetorical. But I listen to the older/experienced traders before, during, and after the market on the Virtual Trading Floor and I hear the word conviction getting thrown around a lot. Especially when I’m listening to Marc Sperling. When Sperling is doing his pre-market talk to his traders regarding his thoughts and views about the overall market, he consistently says that ‘if you are going to ever be successful and make consistent money in the markets you need to have conviction behind your ideas.’


So I often ask myself if conviction is earned. I know the market doesn’t care about what I think, especially as a young developing trader. I feel conviction is something that very new traders cannot afford to have. But as I am now trying to progress out of a newbie trader, I am working hard on my position sizing. And in doing so I have had high probability great risk/reward setups that I have traded phenomenally well. But because I lacked that killer conviction I only traded those setups with 100-300 shares. And I do that consistently. So that brings me back to my question; at what point do we know that we have earned the right to have conviction? Not only on our trades but also conviction in our own ability.

Bella Responds

A touch after 7PM last night I left Steve’s office after reviewing the content for his Free Webinar today: From Good to Great. I headed back to my much smaller office, passing through a lounge area, when I heard,”Mike”. It was Sperls, still at the office and not looking like he was close to heading home. We soon turned to the email question above.

Sperls (all successful traders have nicknames) shared an important difference between the great intraday traders and those trying to become great is their conviction. Sleeves rolled up, Marc explained that this comes from years or being right and getting paid in good positions. Now on a roll, talking about something he’s internalized, Sperls continued that the best traders press their trades when they have conviction. If a position doesn’t feel right to him then he adjusts his position. When he’s trading well he’s quick to exit his losers. When Sperls struggles (which happens to all traders even at the highest level) he is too slow to get out of his lesser trades. He made it clear, no crystal clear, that conviction is something you earn.

You can be better tomorrow than you are today!

Mike Bellafiore

One Good Trade

The PlayBook

no relevant positions

3 Comments on “Traders Ask: How Do I Develop Conviction?”

  1. Totally agreed…conviction has to be earned. 

    It’s the same in any endeavor where you need to make decisions in uncertain, pressured circumstances, without the luxury of tons of time and perfect information. Add some risk into the equation, and you start to appreciate the value of experience and having been in similar situations many times before.

    A boxer gets better because of conviction gained through many rounds of being pressured sparring, and training his skills over and over and learning from his mistakes. It also makes the world of difference between an amateur and a professional when that conviction comes into play. 

    Great read, as always, thanks guys!

  2. Excellent blog post topic!  This seems like an overlooked area for discretionary traders.  Conviction isn’t a function of cockiness or “guts”.  It’s the reward for hours and hours of hard work.  Without conviction, you have to substitute “guts”, “courage” or some other emotionally-charged state.  If you’ve done the work, you know the risk and you welcome it.  I’d love to see more educational emphasis put on the proper state of mine at the moment you ENTER a trade — specifically, if you have reason to think this is a positive-expectation trade, how much data should that be based on?  Because it worked twice last week?  Or because you’ve traded/backtested it 1000 times under different market conditions?  How much is “enough”?

    Thanks for the regular stream of great inside-baseball commentary!

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