When a trader loses confidence, there are several characteristic phenomena:
- has difficulty entering the market (uncertainty about what will happen),
- has difficulty managing the position, is more susceptible to “getting scared” from the market,
- has difficulty in reaching TP.
All 3 features make profitability decreasing and can even enter a longer period of losses solely for this reason.
In many traders who have a problem with confidence, I have seen how their market perception changes. In extreme situations, intuition disappears. The market for them just starts to look different – only because of psychological changes!
Sometimes it is an irreversible process.
The self-confidence of the best traders is the result of extensive experience, good market perception (market intuition), strong psyche (in particular resistance to stress), good control system (allowing to quickly determine whether the loss is caused by psychological, technical, fundamental factors etc).
The best traders have a specific feature, I call it an objective look at the market and themselves. They are able to separate their reactions and weaknesses from what is happening on the market. This characteristic is not possessed by weaker traders. Thanks to that they are able to diagnose the cause of the problem. This is necessary when the trader has to do it himself, because there is no one who understands the situation from both: the technical and psychological side – it is very difficult.
One of the interesting ways I can recommend you to improve the “objective look” on the market and your way of trading is to teach/train other traders. Dozens of questions that the trader gets from others allow him to better understand the system, the market and, in part, himself – look at these three elements more objectively.
Learning to look more objectively requires knowledge and work, be a good coach who knows the realities of the industry. Distance is what is happening on the market and the distance to yourself are the main words here – the keys..