We make a case based on evidence and then we doubt it. Why? The art of trading requires a mindset of irrefutable confidence.

The human mind is doomed to worry. There are the glass half full guys who will barrel on regardless of the obstacles and that can be good, but it can also be a little dangerous as it encourages recklessness. That effect needs to be corralled.

Most traders I come across give me the glass half empty or the ‘what if’ argument and more often than not that this a preventative, protective guard that deflects the need for decision making or fear of making a loss, or worse still being wrong. God. Forbid! That’s the ego thing rearing its head. But it’s OK to take a loss all good traders do its part of the reality. So, don’t worry.

The worry word and doubt emotion are unforgiving clouds that can hang over your decision-making head. Be relentless in your confidence, but cool, calm and disciplined in your analysis and plan implementation. Exhausting I know. So many complexities go into developing the trading psyche and identifying and overcoming our biases. A couple of favourites: Information bias – only taking notice of information that supports your position, or Anchoring bias – where we get gun shy because that last trade(s) was a loss. The Covid disaster and losses caught many out and look what they missed in the resulting rally of many stocks. Follow the plan with gusto.

In then end if your trade plan is sound then you have good basis for confidence within the right expectations of what you can achieve. Taking a loss is difficult to accept. Take them in your stride and march on. It’s only when you achieve a level of confidence that profits will flow. Unfortunately, it’s a bit chicken and egg but that’s part of the challenge.

As to profits don’t let them go to your head, the market will slap you down when it wants. Just make sure it doesn’t hurt to bad. You know the limiting of losses with stops! Capital Management – vital

Trading is very much a probabilities game that is based on a strategy. Strategies, well there are many that work. Don’t mix them. Be clear and focused. Often traders take the goods bits of various strategies a try to meld them together. It rarely works because the strategies are trying to achieve different things and down go the odds of success. You will become confused; signals will conflict, and you can be left with something very messy and then you try and add in exceptions to the rule and this simply further complicates the strategy, and the plan then becomes unworkable. You can travel down that road only so far.

We’ve all heard of K.I.S.S. and it’s true. I know I’ve learnt the hard way and it has cost me. But not anymore. Simplicity and focus. The road to get to that point has been long and arduous. But I’m there to try and short cut the process for you somewhat. Two simple entry setups and one exit strategy. It is really all I need. Just as Stockradar portfolios are high conviction. The 5 stock performs better than the 6 stock, the 6 better than the 7, the 7 better than the 8, and so on it continues.

So now I’m arriving at two key points. Simplicity and Focus. In previous articles I underline the fact that strategies come and go but the important principles that underline them are the same. You know discipline, capital management etc. you can read them in the Radar’s Rant section of the October Radar Newsletter. Peter Lynch or Warren Buffett strategies are not my thing, but they are both ultra-successful. Have you heard Buffett / Flint story? Google it. It’s a fun read and you’ll get what I mean.

As we move ourselves towards the successful combination of simplicity and conviction the probabilities skyrocket and the positive mindset grows. That’s because we have the confidence to focus on what we believe in a very simple and easy way. What I also know is that the ‘what if’ argument is a low odds reality so although they might exist, they are the low odds of what might happen, rather than the highs odds of more likely to happen.

Keep it simple and be confident.