We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
GBP/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
Gold
Mixed
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Bearish
More View more
Real Time News
  • Looks like this will be a down week for #wallstreet. #SP500 is about 1% lower over the past 5 trading days. This is as the #Fed's balance sheet declined about -0.26% to $4.172t from $4.183t. These down days may become more often as the central bank slows the pace of #repos https://t.co/4UX3HRpDZZ
  • The impressive February (and 2020) charge by the $DXY Dollar Index has earned a proportionally substantial pullback with the biggest single day drop since Aug 23 https://t.co/GmPVKZmb3q
  • 🇺🇸 USD Baker Hughes U.S. Rig Count (FEB 21), Actual: 791 Expected: 787 Previous: 790 https://www.dailyfx.com/economic-calendar#2020-02-21
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.95%, while traders in USD/CAD are at opposite extremes with 75.22%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/A8nEuBiTbx
  • Heads Up:🇺🇸 USD Baker Hughes U.S. Rig Count (FEB 21) due at 18:00 GMT (15min), Actual: N/A Expected: N/A Previous: 790 https://www.dailyfx.com/economic-calendar#2020-02-21
  • Kind of indistinguishable at this point. https://t.co/9RqIR2V9Kg
  • #ICYMI 🤷‍♂️ https://t.co/1itQc4XBSi
  • Its monthly PMI report printed 49.4 for the services sector, missing expectations of 53.4. Manufacturing slowed for February, coming in at 50.8 versus expectations of 51.5. Get your market update from @FxWestwater here: https://t.co/woXvXX1uqq https://t.co/pFp8MAj52O
  • Commodities Update: As of 17:00, these are your best and worst performers based on the London trading schedule: Gold: 1.46% Silver: 1.01% Oil - US Crude: -1.22% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/2YDRzkhh2r
  • Forex Update: As of 17:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.70% 🇪🇺EUR: 0.69% 🇨🇭CHF: 0.61% 🇯🇵JPY: 0.34% 🇦🇺AUD: 0.32% 🇳🇿NZD: 0.29% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/ERmoJN8HUS
Trading with Confidence in the Forex Market 

Trading with Confidence in the Forex Market 

2019-05-15 09:13:00
Warren Venketas, Markets Writer
Share:

It goes without saying, but confidence is essential to trading or anything individuals set out to do. There are certain ways to approach building confidence, maintaining it, and making sure traders stay on track. Without confidence, traders can’t perform optimally. There are necessary steps to take to not only build confidence, but to maintain it as well. For traders to feel confident in forex trading, a suitable game plan is required.

Here are some pointers to help increase trading with confidence:

  • Know your trading style
  • Pin down a trading time-frame 
  • Focus on few currency pairs 
  • Calculate your risk tolerance 
  • Focus on process not outcomes 
  • When your trading confidence is hit, reflect and repair 
  • Avoid trading overconfidence 
trading with confidence

Know Your Trading Style

The first of several facets to trading with confidence is having an analytical methodology and strategies which fit the trader’s personality. Each trader has a different view on how things work and what resonates when it comes to analysis. Having a firm understanding of what works is extremely important as well as being consistent in application. Whichever type of analysis is selected, traders should not overcomplicate matters by adding components which could lead to confusion. Simple and consistent application of indicators – support and resistance, trend-lines, Elliot wave theory will lead to traders trading with confidence.

“Through consistency you build confidence” –Paul Robinson Currency Strategist

Pin Down A Trading Time-Frame

Time frame filters down from the trading style or strategy employed by the trader. Different trading styles generally relate to specific time horizons. For example, a position trader will target long-term time frames for each trade. Time-frames completely depend on the trader’s mentality and the amount of time they can dedicate per day. 4-hour time frames can be a good place to start off as it avoids market noise and does not require constant monitoring. This comes back to sticking to a trading style which will prevent traders from jumping around between time frames.

Focus on a few currency pairs

Know the markets or currency pairs which are being traded as per the strategy. Keeping the pool of instruments/markets small is always a good idea. Not all asset classes or even instruments within an asset class move the same, they have their own characteristics. Knowing the behavior of this small universe of symbols will give you more confidence when trading.

Calculate Your Risk Tolerance

Trading with confidence has strong links to risk management and understanding tolerance for risk. This is perhaps the most important facet, as it keeps traders steered towards taking the proper amount of risk per trade to prevent traders overriding analysis with emotion based on a lack of acceptance of the risk per trade. Risk management trumps analysis.

Focus on Process Not Outcomes

Focusing on the process, not the results will allow traders to gain greater confidence whilst trading. This requires patience to refrain from primarily focusing on the end goal. One way to do this is to keep a checklist, whether on paper or mentally. This will help steer traders towards the trades which suit the trading plan and prevent traders from entering harmful trades. It also helps deviate focus on the profit/loss (result) and maintain objectivity. In addition to the above, focusing on process-orientated goals will aid traders in remaining organized in relation to the trading goals.

When Your Trading Confidence is Hit, Reflect and Repair

Drawdowns can take a trader out of the proper mindset to trade with confidence. In Paul’s video above, it was discussed how to handle a drawdown, which is an inevitable occurrence from time to time. The first step noted was to ‘get out of the fire’, and effectively hit the reset button. Secondly, review trades that were unsuccessful – market not conducive to trading style etc. It is important to note that the market is always right. Choosing not to trade is essentially a trade in itself. Once issues are identified, returning to the market slowly is a prudent approach until confidence is restored.

Avoid Trading Overconfidence

Handling periods of success and identifying when those periods might be drawing towards a pause is also key to maintaining confidence. Constantly reminding yourself to stay humble during times of success is paramount, if not, the market will make sure to humble you. Handling winning periods properly can be just as important as handling losing periods.

Trading Confidence: A Summary

This article has outlined several pointers that assist traders in building trading confidence. Traders need to recognize these different aspects of the trading process and should not disregard their impact. Controlling every aspect of the trading process is unrealistic, however making a concerted effort to manage the aspects you can control can provide you with a psychological advantage in the market.

Further reading to understand the concept of trading with confidence in the forex market

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.