Overconfidence is often characterized by overconfidence in one's own trading skills


Don't get it wrong here. Confidence is crucial to becoming a successful market trader. However, be confident in placing orders, confident in our trading system working, confident that we can get our lost funds back with consistency, not confidence. like, "Oh, I know everything about the market and I can't lose money."

Overconfident traders often cause trouble for themselves by trading with large position sizes, reopening a position in the same direction after the stop loss, or too many deals.

1. ALWAYS HAVE CRITICAL THINKING ABOUT YOUR OWN TRADING IDEAS

You should ask yourself, "What are the factors that could invalidate my trading?" or "What do I do when the trading goes against me?" From there, consider a few contingencies.

Through this exercise, it will make yourself aware that your seemingly unbeaten trading setup can still turn out to be losers, you become more careful in managing your trades mine.

2. STRICTLY FOLLOW THE RULES OF YOUR ORDER

As noted above, over-trading in a euphoric state is a sign of overconfidence. Get in the habit of checking your trading plan before entering the trade by recording it in the diary, highlight the bullet points listing the reasons we entered the order, it is satisfied with the rule you yet. If all are satisfied, or at least 70-80%, you enter orders.

If none of the above is satisfied with your trading philosophy, don't just "jump in" because you have a "feeling" that the setup will end up winning like your previous trades.

3. LIMIT THE AMOUNT OF PROFIT YOU CAN LOSE AFTER A SERIES OF WINS

When you start to lose after winning a few trades in a row, you will tend to tell yourself it's okay because you're still making a lot of money anyway. While this may be true, it is very risky, as you are becoming too "tolerant" and "permissive" to execute your transactions.


If you are not careful, you can claim yourself an "island" ticket when you lose one order after another. And before you know it! You have lost all of your previous profits!

So, be sure to determine how much% of your previous winnings you want to lose.

Let's say you are earning 6% of your total capital, and you have lost half of your most recent interest or about 3%. Take some time off from trading, reconsider your method and relax. Take 1% of the amount to reward yourself, and see it as an achievement!

Finally, when it all comes back you have found yourself ready for new trading plans. Then we will go back, and start like never had any interest!

Winning feels good. Most of the time, however, it makes us feel like we're invincible; that we can win on every trading. However, once you start to have this type of thinking, which is when you are most vulnerable, carelessness is always present and your profits can evaporate in an instant.

Remember that your goal as a trader is "SUSTAINABLE PROFIT". So focus on building a strong mentality by controlling your ego!

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