Overcome the Lack of Confidence

The dilemma in forex trading is the uncertainty, since it is extremely difficult to predict for sure when the market is going to be overbought or oversold. The struggle between your mind and actions is endless. Sometimes you end up blowing up your account completely due to fear and hesitation. The question is, how can you force yourself to be more focused during trading and concentrate better while entering a trade? How to overcome the urge to close the trade too early and therefore end up with a small profit

Forex trading isn’t easy and there are no guarantees in this game. The trick is to lean to play the odds in your favor and build up the trading experience. 

There are plenty reviews and resources on forex methodology, strategy, psychology – you name it! However, when you just start trading, you often lack the confidence and, honestly, you just don’t quite believe in yourself yet and in the knowledge obtained so far. Even if you have back tested the facts, believing that they really work might take time. 

The doubt can cause you to close the trade too early because you are just too afraid of losing any profits. At times, the hesitation may play in your favor – the cautious trader usually doesn’t lose big chunks of cash. However, the cautiousness can be your enemy when forex market moves on without you after you have exit the trade. It’s always excruciating to see winner trades slipping through your fingers. 

When you are facing fear and hesitation, it could be useful to print out the trading charts and evaluate them weekly. When you notice a strategy that worked for 100th of times before, your confidence will definitely improve. Confidence is build out of security, so when you consistently see your early trading exists and possibilities for greater income, it can push you to stay-in longer the next time you enter forex market. 

In forex, there are no shortcuts. Every aspect of trading is connected to one another and therefore knowing isn’t enough. If the lack of confidence comes from within, the next step is to find out your weakness which causes you to panic. 

Obviously, one of the weaknesses is getting out of trades to early and missing all the juicy profits. If your strategy is responsible for your early exits then you have to figure out the flow and get rid of it.  

Here is another tip that I know – don’t over think it! I found it useful to take decisions subconsciously rather than contemplating on each and every one of them. In my experience, the more I think the more is lost!

Stick to your plan. Actually, go even further and write everything down, including your position, trade entry and exits. Use limits and stops features of your trading platform and try to stay away from the computer until the trade is closed out “automatically”. Being glued to your monitor is not only frustrating, but also extremely unhealthy! 

Success is the key element which drives confidence. There are no better arguments that can make you feel really confident than a winning trade, or even better, a series of winning trades.

If you’re lucky enough to keep your mind cool and not to slip into overconfidence, it’s really important to reflect your winning trades and take some notes. However, you should remember that even a considered trading plan may fail, so never believe that every trade that meets your plan’s criteria will work the same way.

No matter how big or small your trading account is, having some winning trades will help you build your confidence. Always start with small amounts and learn to trade properly first.

By the way, losing trades may also serve as a good trading “mentor”. The same as with winning trades, it’s extremely important to understand that there are now winners without losers, and there will be many losing trades in your trading practice. Still, you should never take every loss as a personal catastrophe, a major failure and a sign that everything you do is wrong.

Sometimes even some perfect trade setups fail. It’s just a part of an overall picture, so just accept it and move on. Learn from your losing trades, analyse what you did wrong, and use it as an experience, which you should try to avoid next time.

Do you know the reason why the world-renowned boxing champion Manny Pacquaio spends weeks and weeks training for a fight that can last 36 minutes at most? It’s because through preparation, he develops a sense of confidence through mastery.

Manny doesn’t know exactly his opponent’s game plan is to knock him out. However, through deliberate practice, he has mastered fundamental boxing skills, how his body moves, and his own game plan to be prepared for whatever punches may come his way.

As a trader, you will never know what will affect sentiment and how the markets will react. This means that the key to confidence and success is to prepare yourself each day until you know you can handle any scenario the market can throw at you.

Keeping track of your winning and losing trades will help to build your confidence, as you will see the power of consistent and disciplined trading.

Forex trading is a high-stress environment, and losing confidence amplifies these feelings. Traders who lose confidence become more prone to anxiety, irritability, and feeling overwhelmed by the demands of trading. The heightened stress negatively impacts performance, decision-making, and overall well-being. Traders may struggle to regain their focus, think clearly, and make sound judgments, which further compounds the negative impact of a lack of confidence.

Moreover, losing confidence stifles creativity and innovation in trading strategies. Confidence provides traders with the necessary mental freedom and flexibility to think outside the box, adapt to changing market conditions, and seek out new opportunities for profit. However, when confidence wanes, traders become more rigid in their thinking, less willing to experiment with new strategies or approaches, and more resistant to embracing change. This limits their potential for growth, adaptability, and the ability to seize emerging opportunities in the market.

After all this being said and you still locked with fear, it could be that you are trading the sums you can’t afford to lose. Reducing the size to the minimum possible until you gain confidence might be a solution for you. Once you start to believe in yourself you can always increase the size of the trade.

Your forex system plays an important role in your decision making. Without much forex experience, trying out something completely innovative might be a problem. New ideas stink with insecurity and therefore the lack of confidence surface every time there is a market movement. 

On the other hand, if your forex strategy is based on solid reasoning then it is just about experience. Trade with absolute minimum and build up your trading skills. Once you can trade and manage small amounts successfully, you will have no problem stepping into the big-player shoes and moving up to larger digits. 

No matter how you approach the market, there will be times when you’re confidence is up and when it is down. It’s how you manage to keep it at a level that allows you to keep working and not fear your next move.

Traders might feel that once they have the system in place, they can dive right in and start earning. Still, if confidence isn’t your strongest characteristic at the moment, there’s absolutely no shame in small steps toward fortifying your psychological trading game.

This career is a marathon, not a sprint, so prepare yourself for the long haul. If you’re adequately prepared, there’s no reason to stop believing in yourself.

© ForexExplore.com 2007 – 2024 Trading financial instruments carries high level of risk to your capital with the possibility of losing more than your initial investment. This site will not be held liable for any loss or damage in result from using the information within the site including forex Broker reviews 2024, market analysis, trading signals, learning resources and comparison tables. The data within this website is not necessarily real-time nor accurate and do not represent the recommendations of the employees. Currency trading is not suitable for all investors. Before deciding to trade currency or any other financial instrument please consider consider your investment objectives, level of experience, and risk appetite. While we do our best to provide up-to-date information, we strongly encourage you to verify it directly with the broker of your choice.