If you don’t have this specific belief, it’s hard to make any progress, not only in trading but in every single thing. Success starts from having Self-Efficacy or in other words, the belief in your own ability to attain your goals and perform tasks efficiently.
Self-efficacy is a widely studied concept in psychology and was introduced by psychologist Albert Bandura in 1960s. According to Bandura, people with high self-efficacy believe they can perform well and for that reason, they are driven them to persist longer when given a difficult task. On the contrary, people with low self-efficacy tend to perceive that tasks are more difficult than they are and give up sooner.
It is therefore essential that you believe in your ability to be an effective trader and that you see trading as a process you can master.Although Doubt may knock your door and invite itself in, you must be ready to not pay your whole attention to it.
Our level of self-efficacy depends on multiple factors. It may be related to the way we were brought up or to attitudes we learnt to model from our parents and our society. It may have to do with our experiences in life or how we are affected by the people we are closest to. Whatever the reasons are, we must believe that trading is an occupation that CAN be mastered. Although it may seem harmless, it is actually dangerous to doubt our ability to build a top trading performance and instead take it as a game that may bring us money if we are lucky enough.
Self-efficacy isn’t that simple as it sounds. A rational part of us may be feeling sure about its trading or learning ability, but there are more subtle forms of self-sabotage than just overt self-sabotage:
- Giving up soon after your first losses
- Not investing enough effort on learning how to strategise
- Trading without a plan
- Wasting money on too many courses, mentors, trading methodologies that just make you even more confused
If I think about myself, when I first started trading, I broke all the rules of good trading. Deep inside I was thinking that this is all too complicated for me. First, I thought, trading requires a mathematical mind that I do not have and a considerable amount of time that I cannot waste if I am not certain that it will give me something back. Most importantly, I kept repeating to myself that it is going to be difficult anyway with my tiny capital.
It didn’t occur to me that I was self-sabotaging until much later. For a long time, I just thought I was a rational person, a realist. I wasn’t having a pessimistic attitude, it was just reality. Now please tell me. Was I having self-efficacy? Was I believing in my own ability to perform trading successfully or in my potential to master it in the future? Of course not.
So I gave up. And few years gone by. During these years, I worked mainly as a psychotherapist and undergone personal therapy. I experienced a lot of changes and through these experiences, it became evident, that I was a hard core realist-pessimist for a lot of other things in my life. I was self-sabotaging and self-doubting constantly. Nothing was ever good enough. Sometimes, I am still struggling with this. But I now know not to let it get the hang of me. Even if my mind tells me “Nonsense! Mistake again!” , I just keep doing what matters to me. My self doubt has lost its power. I just don’t buy into it.
Do not buy into your own self-doubt. Do not believe all the unhelpful voices that tell you success isn’t possible in trading and that you are too small to make it. Just keep doing what matters. Keep trying to master the game. Keep trying to become better. Believe you have the ability to make it happen. Because you do.