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 improving their elementary systems.
In today’s article, we’ll help you find confidence in your trading strategy by dealing with the two major fears that cast their spells over inexperienced traders:
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 jump 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.
Like in 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 that 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 ways to build up your courage and confidence is to backtest 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.
You can download here an online trading 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 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.
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, go to a demo account, and then a small live account.
Hers is an example: 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, or you can try the Bootcamp program for only 95 euros. 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 if it’s with a broker account. For the Bootcamp, you have 12 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. With the Bootcamp account, you’ll be funded with $100K, or if it’s your own account, you don’t need to go right to a much bigger account, though. It’s okay to increase incrementally. From $300, you can go to $600, then $1000, etc. There’s no rush, and it’s best to build your confidence at a pace that is comfortable and manageable for you.
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.
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