Whether you are a new trader building a foundation or an experienced trader struggling (happens to the best), here are 4 ideas to help you Build Confidence in Trading
Review and preparation should be a regular activity not just reserved for the end of the year heading into a new one. It is a good idea to periodically take stock of your trading, and this might sound a little cliché, but by doing this you are able to identify what you do well and what you don’t do well. Play to your strengths, work on your weaknesses.
Use your observations to adjust, tweak your trading plan. It could be highlighting specific trade set-ups that work well (or not), markets or currency pairs which you trade well (or not) and noting down rules you consistently broke that cost you, or rules which served you well.
*For a couple of personal examples, check out the video above.
We understand the difficulties of trading, which is why we’ve put together a variety of guides designed to help traders of all experience levels.
Having a trading plan is vital. It only needs to be a couple of pages, some type of framework from which you operate within. If you are an intuitive type who relies heavily on subjectivity then it is likely to be of a looser variety and fairly short, whereas someone who is more analytical or quantitative in nature will almost certainly have a more rigid set of rules and thus a longer plan. But regardless of where you fall on the spectrum you should have a plan of some type in place to refer to.
We also discussed setting goals. Performance or monetary goals make no sense to me. First off, aren’t we always trying to do our best? And second, your return profile isn’t going to show an even distribution of returns. Like markets, trading is cyclical. There will be times where there are lots of opportunities and other times when there aren’t. By setting goals of making x over y amount of time you are only setting yourself up for disappointment and unnecessary frustration.
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Process-oriented goals are where your focus should be. These are goals that say you will follow this set of rules, only trade these specific set-up types, avoid these situations, etc. These should be relatively quantifiable. For example, your goal could be to risk no more than x% on a trade or hold a certain percentage of a winning position using a trailing stop. These are things you can track. Don’t just say something abstract like, “I will be more disciplined.” Identify what it is that you can do which allows you to say you are disciplined.
Create simple rules of thumbs or heuristics to help keep you on track mentally. For example, “Only act when my intuition agrees with my analysis and creates conviction.” Another could be, “Stress and anxiety are telling me something – what is it? (resolve quickly)
Take it one trade, day, week, etc. at a time. Make short-term goals which cover areas in which you could use work on. You may have several weaknesses, but make sure to tackle only one at a time so not to overwhelm yourself and be counterproductive. Start with anything risk management related and work from there – protecting capital is job #1.
I also discussed some of my market expectations for next year.
For the full conversation, please see the video above…
Past webinars you might be interested in: Handling Drawdowns; Risk Management; Analysis, keeping it simple; 6 Mistakes Traders Make; Focusing on the Process; Building Consistency; Classic Chart Patterns, Part I; Classic Chart Patterns, Part II; Trading Breakouts; Trading Pullbacks; Combining Breakouts & Pullbacks
---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX