Estimated reading time: 3 mins
Traders have to gather information from different sources to become an expert in the retail trading industry. In this process, some traders may experience overconfidence in their trading business. They may act like knowing what is going to be the next state of the price of a currency pair. This is kind of a biased sight of a trader which can harm their trading edge and lower their trading performance. In today’s article, we are going to discuss the problem of being biased and overconfidence in the trading, more importantly in Forex. Stay tuned and try to understand the context of this article and learn from it so that, you don’t have to lose any trades because of your ego.
Gut instinct is really dangerous
Say you have come a long way from the beginning and you are trading more successfully than when you started trading in Forex. If you have spent a lot of time in Forex and gathered all the knowledge from all the participation, you will have a proper idea about how the market behaves. There is also a chance of building overconfidence in a trader as he or she might be more experienced. And, overconfidence causes traders to follow only their gut instinct and not their trading strategy.
When a trader is too biased about a certain behavior of the market price and he or she claims to be able to accurately forecast the change in the price, then it is called Gut Instinct. Remember that the market is always fluctuating and God did not make us with the ability to see the future. So, it is impossible for you to guess something accurately. This kind of behavior also builds up ego inside a traders head and it is really dangerous for your work and your life. A brain filled with ego has less acceptance of any suggestions or ideas received from others. Some people cannot tolerate the fact of losing a trade. In Forex you can really improve your trading edge by learning from others and the internet. So, you need to let go of that ego of yours and start thinking constructively. Otherwise, you will be finished in the Forex market.
Overlooking the minor factors
Majority of the rookie traders in the United Kingdom often overlooks the minor factors of the fx trading platforms. They simply execute orders without assessing all the variables. First of all, you need a robust trading platform where you can do all the necessary technical analysis. Secondly, you should consider all the variables of the market to eliminate the false trade setups. Once you have spotted the perfect trade, ask yourself how much money you are going to risk in a certain trade. If it’s more than 2% of your account balance, walk away from your trading room. Being a novice trader, you should never risk more than 1-2% of your account balance. Be smart when it comes to the retail trading business. Take your time and learn to wait on the sidelines for the best trade setups.
Be grateful for everything
Accepting your losses can teach you many things in your work. If you have the quality of acceptance, you can learn from mistakes you made in the process. Otherwise, your brain will keep on thinking it and you will keep on asking yourself why that happen to you and only you. You will not be able to find out the cause(s) of your failure.
So, you should learn to be grateful for everything. If you can learn that and master acceptance properly, your instinct will look for the errors in your trading edge instead of looking for the answer to your mistakes. Then you will be able to make a change to your trading plans according to what you have learned from the previous mistakes. Just remember to thank God for everything and research what went wrong, if you have made a loss from your trade.