EP147: How Do You Build Your Confidence?

Truth About Forex

6 years ago

In this episode of Truth About FX, Walter talks about the Psychology of Trading and overcoming fear. Why is it important to have confidence in your trading and how can you overcome this barrier? He lets out some insider notes on how you can buildup your confidence and make this your trading edge.

Download (Duration: 04:18 / 4.94 MB)

In This Episode:
00:31 – overcome fear
01:18 – fear of loss
02:07 – baby steps

Tweetables:
How do you build your confidence? [Click To Tweet].
Take those baby steps [Click To Tweet].
Keep adding to your confidence [Click To Tweet].

Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.

Hugh: Hi, Walter. Somebody writes in and asks: They’re trying to apply a trading system that is to their advantage but they need to overcome some fear associated with that trading system. What should they do?

Walter: Psychology of trading is a major key so this trader sort of identified that. When I hear fear, it’s probably fear of losing that I think is going on here. Although, for a lot of traders the fear of missing out on a great trade is also a big one but the fear of losing is probably what’s going on here.

This trader thinks what’s happening is he doesn’t have a trading system that is to his advantage. In other words, he feels that he doesn’t have an edge so that’s confidence. There’s two things going on here.

One is he doesn’t have confidence in his strategy — and there’s a couple of things you can do there. Number two is the fear of loss. I’m just going to read between the lines here and say this is what’s going on. I hope it’s right. But, the good news is even if it’s not the trader’s specific problem, a lot of traders do that with this problem.

Number one is how do you build your confidence? The easiest way is to backtest in Forex Test or use a MetaTrader Demo Account and hit the F12 key and record your trades in the spreadsheet. That’s number one.

Number two is you can build up your confidence by running a demo account with your strategy. I was just talking to a trader the other day. He’s been running his strategy on a demo account and had consistent results. I think his largest drawdown was like 6 or 5% or something. He’s done really well and we’re just like, “C’mon man. Go live.” He was like, “Yeah, you’re right.” It’s just the next logical step so take those baby steps.

If you’re coming from a place of fear and you have no confidence, you just didn’t know what to do, just take those baby steps. Do the Forex Tester. Do the demo account and then do the small account.

Let’s say that when you trade live, you’re going to trade with $25,000 then, that means when you start live, you start with 250 bucks. Just a really really small amount. Trade in as you would with $25,000 account but just keep building those wins.

Keep adding to your confidence and then after you do that for six months or so, you look back and go, “Wow, I averaged two and a half percent a month. This is excellent. Maybe I am ready to move to a larger account.” Maybe you don’t have to go the whole 25 grand, maybe then you go to a 5 grand account or whatever.

The point is, you can just baby step your way into it. I know we feel like as traders it’s like, “Okay, we’ve got the system. Now, we need to just plunge and take all our money in. Just run the system on it.” You don’t necessarily have to do that. Sometimes the best way to do is just to take baby steps so, that’s what I would recommend.