How to overcome doubt and fear in order to reach your maximum potential
Fear can be crippling. Despite everything being in order and prepared, a well placed strike of fear can potentially ruin it all. We can drill, prepare, practice, and think we’re ready. But when the moment comes to pull the trigger on our action, it can all malfunction instantly.
This type of fear, the instant, sudden, paralyzing fear affects all traders but especially those who are newer to the industry. Veteran traders will have developed time and tested methods for navigating the market while new traders are constantly looking for, and to improve their elementary systems.
In today’s article, we’ll deal with the two major fears that cast their spells over inexperienced traders:
- Losing or having low confidence in a newly formed trading strategy
- Fear of loss
Fear of Applying a New Trading Strategy
Many new traders will spend hours, days, weeks or even months crafting the perfect trading strategy to match their personality and style. But what happens when a trader is all ready to go but when it comes time to jumping in the market, they just can’t pull the trigger?
The lack of confidence in a new system that many traders experience is poison to succeeding in trading. If you don’t believe in yourself and the system that you’ve created, there is no hope for you to execute that plan well.
How to Overcome this Fear
Like in so many aspects of our lives, confidence is the key here. A full head of confidence can be the deciding factor in going into the market strong and executing your plan faithfully, or missing your mark and failing to proceed the way you know you can and should.
Even with a trading system which the trader knows is to their advantage, some junior traders just can’t enter into the live market. It’s intimidating and scary until you’ve earned your keep.
One of the easiest and most time tested way to build up your courage and confidence is to back test in a forex tester and then use a metatrader demo account. Remember to record your trades in a spreadsheet as these movements will be incredibly useful to go over in the future when you make tweaks to your plan.
The next step on the road to building up your confidence is to run a demo account with your well crafted strategy. Consistent results on a demo account are an effective way to build up confidence.
If you consistently nail it in a demo account, there’s no reason why that same strategy won’t have similar results in a live account.
It’s All About Baby Steps
If not built from a solid foundation, confidence can be fragile and slip away at the first sign of trouble. This is why it’s completely OK to take baby steps in order to build yourself up. As we wrote, start with a forex tester, then go to a demo account, and then small live account.
Let’s say on the demo account you’re trading with $300,000. Instead of rushing in and trading that amount on a live account, start the small live account with just $300. It’s a very tiny amount but as you keep building wins, you’ll keep adding to your confidence.
Do it for an arbitrary amount of time like 6 months. After this period ends, look back, and if you’ve been successful, you should feel incredibly good about yourself.
Imagine you’ve averaged 2.5% per month. That’s pretty darn good. You don’t need to go right to a much bigger account though. It’s okay to incrementally increase. From the $300, you can go to a $600, and then $1000, etc. There’s no rush and it’s best to build your confidence at a pace which is comfortable and manageable for you.
It’s Not Going to be Easy
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 which 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 but if confidence isn’t your strongest characteristic at the moment, there’s absolutely no shame in small steps towards fortifying your psychological trading game.
This career is a marathon, not a sprint, so prepare yourself for the long haul. If you’ve adequately prepared, there’s no reason to stop believing in yourself.