How does self-confidence have a place in Jewish thought if all is in the hands of Heaven?
The Torah perspective on self-confidence is somewhat complex. As you said, everything is in the hands of Heaven. As such, there is no way that I can succeed if it has not been decreed so in Heaven, and there is no way that I can fail if such has been decreed. This you surely know from many sources, most obviously from Psalms 127.
The humble person, then, is the one who proceeds fearlessly, confident that, if it is the will of Heaven, then nothing will stand in the way. What follows then, is a system called hishtadlus, whereby a person is obligated to conceal the miracle of G-d’s involvement by making what appears to be purely human effort. The requirement of hishtadlus varies according to the spiritual level of the person. (This is a complex topic that extends beyond the bounds of an email correspondence.)
This leads us to the tricky part: A person starts out without a consciousness of the hand of Heaven and, as such, lives a life which gives the appearance of randomness, as well as the sense that it is all up to him. Growing to the point where one recognizes the hand of Heaven is a process of ever-increasing awareness and consciousness. This is called the development of Bitachon. As one’s Bitachon increases, his confidence in Divine Assistance will increase accordingly.
So, in a word, there is no such thing as self-confidence from a Torah perspective, and that which replaces it, Bitachon, is a complex subject.
Please note that this discussion pertains specifically to self-confidence, and not to self-esteem; the latter being a completely different topic.
Best wishes,
Rabbi Azriel Schreiber