I have repeatedly heard and read on Internet resources that a successful trader must be self-confident. But is it so? Is self-confidence really a trader’s helper?
How is self-belief formed?
At the moment, there are a lot of materials on trading psychology, how to properly form your view on trading and all its psychological components. Many beginners simply ignore this information, considering it a useless waste of time. However, it is very important to properly form faith in your own strength, subtly feeling the line between confidence in your abilities and banal pride.
Attitudes towards failure
It is important that faith in one’s own strength begins to form together with the acquisition of the first Forex trading experience. Let it be the first unsuccessful transactions, the first losses of real money, but a beginner trader should clearly see and feel that the ‘Golden Rules of Trading’ have their real power. The first failures will be a good motivation for a beginner to start working on his mistakes, to identify weaknesses and strengths of his trading strategy, to objectively assess his strengths.
Attitudes towards first successes
It often happens that after a series of successful trades, beginners begin to believe that they have been able to unravel the secret of successful trading and now they are not beginners, but great trading gurus. After all, it is possible not to analyse the market at all, but still have a very good income.
Usually, such self-esteem leads to the fact that subsequent failures are just a dark streak or a coincidence of ridiculous coincidences, but not a recognition of their mistakes. And in the future, this trader will violate all written and unwritten laws of trading, engage in counter-trend trading, believing that he does everything right, because he is the best among the chosen ones. So, you should treat your first successes calmly, so that your self-esteem is objective.
The three components of self-confidence
A trader’s objective self-confidence is made up of three main components:
- Experience. The more trading experience a trader has, the more confident he becomes in his abilities.
- Constant analysis. Constant and in-depth analysis of the market situation and your trading techniques will help you to objectively assess any situation.
- Self-criticism. Only self-critical evaluation of your actions will help you avoid the trouble with inflated self-esteem and belief in your unshakable rightness.
Conclusion
From all of the above, we can conclude that self-confidence of a trader can be both a positive quality, when in any situation, completely calm and relaxed trading, without internal tensions, and negative, when self-esteem increases and the trader considers himself unrivalled ‘Guru’ of trading.