Welcome back to our discussion on Napoleon Hill’s work The Law of Success in 16 Lessons.

If you’re just joining us or would like a refresher on the Laws of Success, they are:

1. A Definite Chief Aim
2. Self-Confidence
3. Habit of Saving
4. Initiative and Leadership
5. Imagination
6. Enthusiasm
7. Self-Control
8. The Habit of Doing More Than Paid For
9. Pleasing Personality
10. Accurate Thinking
11. Concentration
12. Cooperation
13. Profiting by Failure
14. Tolerance
15. Practising the Golden Rule

In Part 1 of this series, which you can read here, we looked at the concept of a Definite Chief Aim. In this article, we will be exploring Self-Confidence, a very important trait for a professional trader to have.

Self-confidence is something that a lot of people struggle with, particularly in today’s society when we are bombarded with images in the news and on social media of perfect-looking people portraying perfect-looking lives. It’s easy to convince ourselves that these people are really that good-looking, when in fact most of the pictures are photoshopped or at least optimized. Similarly, there have been many instances of so-called influencers renting expensive houses or cars to portray a level of wealth that may not necessarily be accurate. Now, more than ever, it’s important to develop confidence in ourselves and acceptance of where we currently are, both personally and financially, to ensure we are not affected by the images we see on social media feeds. Similarly in trading, if you want to succeed, then self-confidence is an absolute must.

There are two key times in every trader’s career that they need to have a high level of self-confidence. The first key time is when you are making a decision to become a trader. Some people are naturally confident and back their ability to achieve whatever they set out to do, however, for most people, there is always going to be a little bit of doubt, especially in a field such as trading financial markets, which can seem complex and difficult to outsiders. To those doubting their ability to become professional traders and succeed in this field, I would encourage you to at least dip your toe into the water and give trading a try. There is a lot of free information out there (check out Safety in the Market’s YouTube channel for our FREE FX Trading Course and a whole bunch of other educational content) and most brokers will let you open a trading account and trade a practice or virtual account for free, without putting any of your own money at risk. Knowledge really is power in this field, and once you see how markets work, and see that they tend to do the same things over and over again, you will build confidence as your knowledge grows and you will know that you can make this work for you.

The second key time in a trader’s career where self-confidence is important is right after you experience a loss in trading, particularly your first loss. I hate to break it to you, but there has never been a trader who never experienced a losing trade – it is just a part of trading. At Safety in the Market, we teach you to target a 10 to 1 Reward to Risk Ratio on your trades, meaning that if you risk $100 on a trade (your Risk), you should make at least $1,000 (your Reward) if you are correct on the trade. Even then, no matter how many 10 to 1 trades you take, it’s never nice to experience a loss. If you find yourself lacking confidence after a loss or even a few losses, it often means that you haven’t tested your techniques over a large enough period of time to prove to yourself beyond any doubt that they work.

There are a few steps that you can take if you find yourself in this position. Firstly, it’s important to review the work that you have done that lead to the loss. These days, losses don’t bother me because I know that the techniques I use from the Active Trader Program work. They work today, just as they worked in the early 2000s when I started trading, just as they worked in the 1990s when David Bowden first taught them, and just as they worked in the first half of the 1900s when WD Gann discovered them, and because I have put in the required amount of work, I have the confidence to simply move on to the next trading opportunity. I also encourage traders who are down on confidence to think about other areas in their life where they have been successful. Think about it: on the road to most of your successes, there were setbacks before you achieved your aims, but you overcame them and moved on. You will be able to do the same for trading. Just believe in yourself!

In The Law of Success, Napoleon Hill also encourages the use of formulas or affirmations to build confidence in yourself. A lot has been written on affirmations over the years by far more knowledgeable people than me, however, the basic concept is to repeat out loud an empowering phrase or series of phrases that give you belief in yourself. A simple example used in The Law of Success is:

“I know that I have the ability to achieve my definite chief aim“

(click here if you missed the lesson on A Definite Chief Aim)

For traders, we might say “There are always good trades out there just waiting for me to find them” or “I am a good trader and my profits far exceed my losses over time.”

The interesting thing with affirmations is that even if they are not true YET, they have a way of becoming true if you repeat them often enough.

Finally, I’d like to share a short story about how I found my confidence in a situation where I was severely doubting myself. I was asked to fill in for a cricket team one weekend in 2008. For those unfamiliar with cricket, it’s a bit like baseball where you are trying to score more runs than the opposition, however, you only get one chance per innings when you’re batting, and when you are out, that’s it, you’re out!

I used to open the batting in A-grade cricket but I hadn’t picked up a bat for years and I was hopelessly out of practice. The team I was helping out asked me to open the batting, and since we weren’t chasing many runs I didn’t think much of it. But we lost our first three wickets for no runs, and I just couldn’t hit the ball at all. The bowlers were too quick for me, I was out of form, and I was pretty sure I would be out of the game in a moment too.

However, one thing you may not know about me is that I hate losing. My first sporting memory is being bowled out first ball by my Dad when playing cricket at a family picnic. Many years later, I learned that Dad also bowled Mum first ball too, and let’s just say that neither of us were impressed! But not taking defeat well made me a very competitive person.

On this particular day, I decided that I was going to find a way to win the game for the team. And I did. I ended up hitting the winning runs and surviving for the rest of the innings. It wasn’t pretty, but I got the job done. Now, the win wasn’t important in the scheme of things – I never saw that team again, it was a one-time deal. But the WAY I did it has served me very well both on the sporting field and in life, and I often draw on this. I asked myself a question: what if this was a war, and the consequences of losing were unacceptable to me? What if the opposition team were the enemy, and I was the last person standing in their way? Now it might sound silly, but all of a sudden, I had FOUND MY WHY. I had a purpose, a reason to succeed. I stepped forward, batting out of my crease even though the bowlers were too quick, and this gave me even less time to react. However, it also made it harder for them to get me out. I then chose 2 shots to play, the forward defence and the leg glance, two very low-risk shots, and that is all I played. I took some knocks on the body and ended up with some bruises, but I scored some runs and won the game for my team.

Again, it wasn’t an important match, and I don’t think it was a very high grade either. No one else probably thought much of my innings! But I turned the situation around by FINDING MY WHY and giving myself a reason to succeed. The end result is that I did succeed, and in doing so, I built my self-confidence. If required, I could have turned up the next week and played with far greater confidence.

The lesson here is to be clear on WHY you are trading before you begin. There’s an old saying that when the WHY becomes big enough, the HOW takes care of itself. I have used this technique in both its positive form (moving towards a favourable scenario) and negative form (moving away from an unfavourable scenario) and both work.

Action Items:

• Make a list of as many of your achievements as you can remember. They might be from school or from the sporting field or from work. Or, they might be as simple as learning to walk or learning to read. Then, the next time you find yourself lacking in confidence, refer to this list and remind yourself that you are awesome and that you are going to succeed!

• Find Your Why. Why is trading success important to you? This can be done using either a negative scenario (such as moving away from a job you don’t like) or a positive scenario, such as moving towards a new, financially free lifestyle. Remember, when the WHY is big enough, the HOW takes care of itself.