Stay true to your trading plan when you're winning in a row
Controlling emotions and keeping your mind calm in times when you experience losses or large decreases in trading capital are the keys to making consistent profits. However, controlling emotions when you win turns out to be just as important.
Because being overconfident in trading is also not good. When a trader becomes overconfident it is usually characterized by excessive confidence in one's trading skills.
Confidence is essential to becoming a successful forex trader. However, excessive confidence can make you think that you know everything about the market and that it is unlikely that you will lose.
Overconfident traders usually get into trouble by trading larger than usual position sizes, doing the same even if the move doesn't work, or overtrading (opening a large number of trading positions at the same time). If you've ever made those bad trades and the results upset you, don't worry. You are not the only one who is arrogant. At this time it is more important to figure out how to keep you from repeating it again. Here are some suggestions for you:
1. Criticize your own trading ideas. You must be asking yourself, "What is killing my trading philosophy?" Or "What will I do when my market direction is opposite to my trading position?" From there, consider some contingency plans. Criticizing your own trading ideas will make you more careful in managing your trades.
2. Apply your entry rules. As mentioned above, overtrading or opening a large number of positions at simultaneous times is one of the signs of overconfidence. Review your trading plan before making a trade. Does the price action at that time meet your entry criteria? Otherwise, don't go straight in just because you have a "feeling" that the current trade setup will result in another win like the previous trade.
3. Limit your losses. Just like when you're on a losing streak, setting your loss limit also needs to be done when you have the upper hand or when you win. When you start to incur losses after winning several trades in a row, there is a tendency for you to assume this is not a problem because you still have a lot of money.
While this may be true, the danger is that you may be lenient with your execution performance. If you are not careful, you will probably become very permissive to losses. And before you know it, you've already lost all your profits! So be sure to determine how many of your victories you are ready to "be sincere." Let's say you've lost half of your most recent 3% profit, you might want to take a short break from forex trading, reconsider your trading approach, and check what you've done differently.
Read the article : These 4 Activities Can Help You Trade Better In the end, everything comes back to your forex trading plan.
The best way to keep yourself from being overconfident is to make a detailed trading plan and stick to it. Victory feels so good that it makes us feel like we are invincible. However, once you start having this kind of thinking, that's when you become most vulnerable to sloppy trading and your profits can evaporate in an instant.
Post a Comment for " Stay true to your trading plan when you're winning in a row"