Gaining experience in Forex trading is a wonderful thing; it enables you to recognize a bad trade when you make it again. And why is that? Are we in a hurry? Did we forget to check the news? Was it that new strategy that can’t lose (but always does)? Was your daughter wanting help to get that umbrella off the high shelf when you should have been looking at the weekly trend? Did price action instantly reverse direction the second you executed a trade? We’ve all been there and done that, and yes, life’s daily difficulties don’t necessarily help deal with the uncertainties of a market that always seems to move in a way to drive one insane, but developing a good balance of confidence surely helps. I say “balance” as I believe that confidence needs to find it’s sweet spot, neither too much or too little is a good thing.
Having spent many years in the aerospace industry, I appreciate the advice given to fledgling pilots: when you get good, watch out! I know this is true for me, especially when I try a strategy that I know will work flawlessly, only to see it fail miserably. Yes, the market does have an insidious way of humbling those who fail to respect it and what it can do. At any rate, I thought it would be interesting to share some things that would be beneficial in building confidence as a trader.
Let’s face it: Forex trading is not the easiest of pursuits, although, through practice and perseverance it can be very rewarding. Trouble is, particularly for newcomers, discouragement can quickly and inexorably replace enthusiasm and place the new trader in the 95% or more of Forex traders who simply fail. True, it can be very difficult indeed to remain optimistic when trade after trade goes against you, even in a demo account environment. Let’s focus on some attributes that will encourage the new trader in this endeavor.
First and foremost is a positive attitude. Being negative will get you nowhere, with the exception perhaps an office full of broken furniture. And of course at the most difficult times there is always some smart alec who is going to point out to you the fact that if world didn’t suck, we would all fall off. Yes it may be corny of me saying this, but maintaining a positive attitude is of essential importance. This businesses is worse than learning to ride a bicycle on steroids. It will be failure followed by failure, followed by more failure. But eventually something clicks, one learns to balance on two wheels, and, we’re off to the races!
Another aspect of building confidence is to remain focused. But not on the result, be focused on the process. Always remember that with every trade you place, the market can do anything it wants. Yes, a profitable trade is wonderful, but remember, success is, to a larger extent, measured by the trader’s discipline in managing his trades, not so much the outcome of the trades. Stick to your plan, work within the rules of the strategy you’re using, manage your account wisely and be patient. The rewards you seek will come in time. Take pause to commend yourself for not placing that trade too quickly, for waiting for that candle to close, for closing a position in profit (even if it’s a small profit) etc. And don’t dote on losing trades, just take them in your stride, and focus on the next trade. There’s always the next trade.
That’s all for part one, stay tuned for part two!
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