Trading confidence is the psychology of initial success. it is the feeling or belief with a firm trust that you can rely on a strategy or trading plan. It is the psychological tool that traders have and use to fight fear and all emotions related to it. How do we gain confidence? We get it once we achieve the first success with any strategy that we come accross with.
A trader must be aware that confidence, while it is one of the best emotional tools we have to fight fear on trading, confidence can also mislead us to do something stupid. Sometimes too much confidence makes us think that our strategy is the best strategy and it always has its magic. This can lead you to increase lotsize more than what is stated in your trading plan. Over confidence can also make you enter pre-mature trades. For example, if you have 5 conditions in your strategy then your current analysis meets only 4, because of your confidence in your strategy plus greed, you won't wait for the fifth condition to appear. You will open a trade right away.
Confidence can also make us tweak strategies irresponsively. Tweaking, exploring, and experimenting are important for you to discover good strategies, but you have to do it right. You can not expect success if you keep integrating all strategies you find into one analysis. You have to be careful in combining different analysis. This is common to old traders that have been using generic strategies in predicting price direction. When they see a new strategy, they do their analysis using it, then at the other part of the analysis they will check their old generic analytical tools to confirm. There are 2 things may happen, 1) you will fail. 2) you may experience success but it slows the profit. You are not sure if it's really working or you just got lucky. You can't really tell at an early stage. In order for you to confirm that it really works, you have to do the same analysis for a long period of time and no short cuts. Based on what I have observed with hundreds of students that I've had, on the next trade, they would tweak even more.
To be successful, keep it super simple. Just follow the trading plan exactly the way it is stated in the rules, no ifs no buts. If you think there's a better way of doing it, (good, you are thinking) do it in a separate account for at least 3 months.
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