How to Gain Confidence in Your Forex Trading Abilities
Being a confident trader is not something that just happens overnight. It is the result of consistently doing many things correctly for a long enough period of time. In fact, you could even say that consistency is the main ingredient for confidence in a trader. Many traders experience fear, doubt, and indecision while interacting with the markets, there are a number of reasons why this happens, but it is primarily a result of one or two things; not knowing exactly when their trading edge is present and (or) not being disciplined.
• Trade the daily charts
Learning to trade the daily charts before you look at any other time frame is something that will contribute greatly to building your Forex trading confidence. Trading higher time frames drastically increases trading success because it allows you to slow down and get a clear and relevant view of the market. Time frames under the daily chart can often produce many more “false” signals and market “noise”, this tends to result in over-trading for most beginning traders, and over-trading will greatly inhibit your ability to become a confident Forex trader.
The daily chart also is much more accurate than any time frame below it. This means that any price action signal on the daily chart carries more weight than a signal on the 4hr chart, and the 4hr carries more weight than the 1hr chart. So, by learning to trade the daily charts first, you will be taking much higher-probability trade setups, and this will obviously make it easier for you to develop into a confident trader. If you start by trying to trade the 4hr or 1hr chart, you will probably not gain a clear understanding of how the daily chart works, and thus you will take many inferior signals, this will make it very hard for you to build your confidence as a trader. It makes much more sense to take a “top down” approach to the markets; meaning, learn and master the higher time frames before working lower.
• Master one price action setup at a time
By learning to trade successfully with just one of the price action strategy setups that I teach at a time, you will essentially become a “master” of it. You will know all the nuances of it and when it works best (in what market condition) and when to trade it and when not to. It is not just as simple as seeing a pin bar on a chart and trading it. You don’t always want to trade a particular setup just because it is present. In my Forex trading course, I teach traders exactly how, when, and why I trade all my price action setups, so you can take your time in learning to trade one at a time, then after you master one move on to the next. Before you know it you’ll have a very “sharp” set of Forex trading tools that will allow you to read and trade a “naked” Forex price chart.
Approaching my trading strategies with the goal of learning and mastering one at a time will help you to develop confidence as a trader. This is a much better approach than haphazardly trying to learn everything all at once. It is far better to be a “specialist” in this world than someone who just has a basic understand of many different things, at least financially speaking.
• Keep good records
In the opening paragraph of this post I mentioned that not being disciplined is one of the main causes of not attaining confidence as a trader. It is very true; not being disciplined in all aspects of your trading is a catalyst for inhibiting your ability to become a confident trader. So, what is the best way to achieve and maintain discipline in your trading?
Keeping good trading records is really the best way to stay on the path of being a disciplined trader. If you develop a concise yet comprehensive Forex trading plan, you will have a daily guide to steer you in the right direction and keep you from veering off course as you trade. This is very important for keeping your mind focused and avoiding emotional trading errors. The trick is that you need to actually make a trading plan and have it be a tangible thing that you use and read every day.
The other big thing you can do to help maintain discipline is to create a Forex trading journal that you use to record and track all of your trades. This will give you a tool to keep yourself accountable. Actually recording your trades and developing a track record will turn into something you enjoy doing, and it will show you very directly whether or not you are being disciplined and consistent in your trading activity. Once you begin to get a positive and consistent track record, you will not want to mess up all the hard work it took to develop it by becoming undisciplined, in this way it will help keep you on track and develop you into a more disciplined and confident trader.
• Learn how to read price action
You have to know and understand what price is doing if you want to build your trading confidence. You cannot begin to develop confidence as a trader if you are not using a trading method that allows you to understand price action. Basing your trades off indicators or computer programs is not going to give you the proper understanding of market mechanics. Being a confident Forex trader is something that depends upon you having a thorough understanding of how markets ebb and flow and how to trade them no matter what condition they are in. Price action trading gives you this ability, but you have to use it wisely and combine it with the proper amount of discipline and self-control.
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About Nial Fuller
Nial Fuller is a Professional Trader, Investor & Author who is considered ‘The Authority’ on Price Action Trading. His blog is read by over 200,000+ followers and he has taught 25,000+ students since 2008. In 2016, Nial won the Million Dollar Trader Competition. Checkout Nial's Professional Trading Course here.
Very valuable information! Thanks Mr. Nial!
All The pointers in this article are spot on. I used to look at 3 different time frames and several setups until I got sick of it with indecision and confusion. Then I did exactly what this article talks of.. I just looked at the daily and pinbar setups. Although there are less signals it teaches you patience and keeps your mind very clear. Trading is very straight forward when you have a plan and stick to it. When you see your trading account grow over time you will know without any doubt that what you have been doing was worth it.
Thanks again Nial! Once again you hit another Home Run with you geniusness! I love reading your articals! Keep them coming!!!!!!