What is confidence?
Some of the definitions from dictionary.com say -1) full trust, 2) belief in the powers, 3) reliability of a person or thing (the market? your trading strategy?) 4) certitude.
But how is confidence experienced? I mean how do you know you have it or not? In other words, where in your psyche does confidence exist – or leave a vacuum? Is it in your brain or in your body?
You might not able to tell so ask yourself the following and listen to where the answer comes from -How much confidence is there in the new US administration? The credit markets? The equity indices? The Cleveland Browns?
Take the question a step further and ask what is the relationship between confidence and beliefs? How are they the same – or different? And again, ask yourself where you experience a belief – your brain or your body?
In truth the brain and body are of course an intricate machine and the parts can’t really be separated but at the same time, we do experience different psychological events in one or the other. For example, as I type these words, it is my brain that is choosing the order and the spelling but it is effected through my fingers. A third dimension of this is how much confidence do I have that I can or am making sense in my post about confidence. If I feel that it is jibberish, I will rewrite – if I feel it it is clear, I will keep going.
But where does that feeling – the one that either posts or erases – occur?
Because the existence of confidence is so critical to markets overall and to individual decision-making/performance in the markets, it is a useful exercise to examine the experience of confidence in order to be able to use it – or replenish it when it wanes.
We all know it is key to implementing a trading strategy and we all know that when a large segment of the investing population is lacking in it, we have a bear market or a trend-day down. Seen any of those lately?
So, how do you define confidence? Where do you experience it?