Internal confidence, on the other hand, is not based on the outcome of your trading results.
Internal confidence is process based. It comes from three things you have complete control over:
1. Knowledge you acquire,
2. Skills you develop,
3. Ability to apply your knowledge and skills in the market.
Internal confidence comes from your ability to organize yourself and take the necessary actions to trade.
The self‐confident trader believes
1. Ability to see sound trade setups,
2. Ability to execute the trade
3.Manage the trade and its associated risk,
4. Exit the trade according to trading plan.
In this way, self‐confidence arises as a sense of mastery in performing the tasks of trading . A self‐confident trader would say with conviction,
1. I am confident in my trading knowledge, skills, and abilities.
2. I am confident I can trade without making unforced trading errors.
3. I have confidence in my ability to assess the market, select appropriate trades, size the trades properly, control risk, execute and manage those trades, and exit at the proper time.
Self‐confident traders are effective traders who do not base their self‐confidence on their last trade or how many points or pips they won on a given day.
Self‐confident traders feel confident on their winning days and they know they were successful because they had the knowledge and skills to trade a favorable market well.
But they also feel confident when they Lose Money as they did not lose a big chuck of there capital and loss which are easy to recover and within there comfort zone.
When you focus on process, you are in control of your self‐confidence .
True confidence comes from within. Any self‐assurance that comes from external factors will always be temporary, unstable, unreliable, unpredictable, and off er only insecurity. This is why traders who link their confidence and self‐belief to trading results are always looking for self‐confidence.