There are plenty 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!
After all this being sad 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.