Last week I had the opportunity to attend a breakfast with Tony Abbott. It was a very interesting discussion. There was very little negative commentary in regards to the current Government, more of an outline of his vision – and perhaps more revealing, the reason for the vision.
Tony Abbott Broad Stroke Message
The broad stroke message was that the Country right now is lacking confidence – confidence in business, confidence in leadership and confidence in policy.
The two areas of policy discussed were Carbon Tax and Immigration
The Carbon Tax
The carbon tax, assuming a Liberal win, in September, will be removed. A couple of weeks ago, in my article on the outlook for crude oil I discussed the incredibly high costs of energy in Australia. The burden it presents for industry, for manufacturing, for the consumer and ultimately the broader economy is heavy.
To give an idea, this is part of an extract from a study undertaken at the University of New England* “The analysis undertaken by simulating the impact of a carbon tax of $23 a tonne reveals some interesting outcomes. For example, in the short run, Australia’s real GDP may decline by 0.68%, consumer prices may rise by 0.75%, and the price of electricity may increase by about 26% as a result of the tax.”
Immigration we may look at another time, but let’s return to the core of the discussion – that of confidence. This is such a critical component of so many aspects of life and in particular, trading.
What about confidence?
It is clear on the sports field, when a player has confidence – everything seems effortless and the outcome becomes not a certainty, but highly likely. Confidence should never overtake competence – as always, the work, is in the preparation – the often unseen effort in building the skills.
As a trader, your job description is very simple – to execute your trading plan perfectly, each and every time. Note by the way, that this description surprises many as it doesn’t focus on profit, markets or anything else – just executing the plan. Why – well simply this is something you have 100% control over i.e. doing your job. Making profit is something where you have no real control of the outcome.
Easy as this job is, it requires confidence – massive confidence in two things:
1) Your ability to discharge your duties i.e. execute the plan perfectly
2) Massive confidence in that plan
Confidence is critical
How many times have you shaped up to take a trade – it lines up with your plan, perfectly and you go to hit the trade button and hesitate. Perhaps you have second thoughts, doubt the plan, question the market or nervously decide to sit the trade out.
Then the worst thing that can happen happens. The trade that your plan identified and you didn’t take, turns out to be a losing trade and you elected not to take it – avoiding making a loss.
Isn’t that a good thing??
No, not at all – because now you’re out of control – you are picking and choosing your trades and not following your plan. Sounds crazy I know, as you just missed a loser so shouldn’t you be celebrating? This is the crux of becoming a professional trader. The two key pillars of your success in the market:
1) Confidence in your process and plan
2) The discipline to always follow it to the letter
Processes
There aren’t gut instincts when making trading decisions – just processes and, when the process is right the results always follow.
Confidence
Just as Mr Abbott cited the lack of confidence in current government policy and as part of this, business’ confidence in the economy. How much confidence do you have in your trading plan, and then your ability to execute it?
As we approach the end of the financial year, why not give your plan a brush up – join us on our online training session. You can register here and we would love to share with you what we are currently doing and why we are generating returns – through a plan that we have confidence in.
If you are new to trading you should start with our Investor Personality Test to see what type of Investor you are, and what type of trading and investing is best suited for your personality.
* http://www.une.edu.au/business-school/working-papers/economics/econwp11-2.pdf
