Being a confident trader is not something that happens overnight. It is the result of consistently doing many things correctly over a fairly long period of time. In fact, one could even say that consistency is the main component of a trader’s self-confidence. Many traders experience fear, doubt and indecision when interacting with the markets, there are a number of reasons why this happens, but primarily it is the result of one or two things; not knowing exactly when their trading edge is present and/or not being disciplined.
• Trade on daily charts
Being able to trade the daily charts before you move on to any other time frame will go a long way in building your confidence in Forex trading. Trading on higher timeframes dramatically increases trading success because it allows you to slow down and get a clear and relevant view of the market. The time frame below the daily chart can often produce a lot more “false” signals and market “noise” which results in overtrading for most beginner traders, and overtrading greatly reduces your ability to become a confident Forex trader.
The daily chart is also much more accurate than any timeframe below it. This means that any price action signal on a daily chart has more weight than a signal on a 4-hour chart, and a 4-hour chart has more weight than a 1-hour chart. So by learning to trade the daily charts first, you will be using much higher probability trade setups and this will obviously make it easier for you to become a confident trader. If you start by trying to trade the 4-hour or 1-hour chart, you will probably not get a clear understanding of how the daily chart works and thus you will be taking a lot of secondary signals, which will make you very it’s hard to build up your confidence as a trader. It makes much more sense to use a top-down approach to markets; that is, study and master the higher timeframes before working on the lower ones.
• Master one price action setup at a time
By learning to trade successfully with just one of the price action strategies I teach at a time, you will essentially become a “master” at it. You will know all its nuances and when it works best (in what market conditions), when it can be traded, and when not. It’s not as easy as seeing a pin bar on a chart and trading it. You don’t always want to trade a particular setup just because it’s there. In my Forex trading course, I teach traders how, when and why I trade all of my price action setups so you can take your time learning how to trade one at a time, and after you master one, move on to the next. Before you know it, you will have a very “accurate” Forex trading toolkit that will allow you to read and trade on the “naked” Forex price chart.
Approaching my trading strategies to learn and master each one will help you build confidence as a trader. This is a much better approach than random attempts to learn everything at once. It’s much better to be a “specialist” in this world than someone who just has a general understanding of many different things, at least from a financial point of view.
• Keep good records
In the first paragraph of this post, I mentioned that lack of discipline is one of the main reasons for lack of confidence as a trader. This is very true; a lack of discipline in all aspects of your trading is a catalyst hindering your ability to become a confident trader. So what is the best way to achieve and maintain discipline in trading?
Keeping good trading records is really the best way to stay on the path of a disciplined trader. If you develop a concise but comprehensive Forex trading plan, you will have a daily guide that will point you in the right direction and keep you on course while trading. This is very important for concentration and avoiding emotional trading mistakes. The trick is that you need to make a trading plan and make it tangible so that you use it and read it every day.
Another important thing you can do to maintain discipline is to create a Forex trading journal that you use to record and track all of your trades. This will give you the tool to control yourself. In fact, recording your trades and developing a track record will turn into something you enjoy doing, and it will show you very directly whether you are disciplined and consistent in your trading activities. Once you start getting a positive and consistent track record, you don’t want to spoil all the hard work that went into developing it by becoming undisciplined, thus helping you stay on track and turning you into a more disciplined and confident trader.
• Learn to read price action
You must know and understand what price is doing if you want to build your trading confidence. You cannot begin to develop confidence as a trader unless you use a trading method that allows you to understand price action. Basing your trades on indicators or computer programs will not give you a proper understanding of the mechanics of the market. Being a confident Forex trader is all about having a good understanding of how the markets change and how to trade them, no matter what state they are in. Price action trading gives you this ability, but you must use it wisely and combine it with proper discipline and self-control.
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