When a trader makes a consistent profit, he is seen as overconfident. That confidence often leads to trading losses. Forex market of possibilities so it is never possible to trade with 100% target here. If ever an overconfident is created, meditation should be done. Meditation helps to overcome overconfidence.
Trading and confidence are directly proportional to each other, but just like excess of anything is bad, excess of confidence leads to incorrect decision making. For example a trader is tooooooo confident on his trading style and strategy, thus ignores all other factors and blindly flows its strategy. This could take a wrong direction as you should make your strategy flexible with changing market environment.
After entering the trade market, new traders become overconfident and jump directly into it. As a result, most of them face a massive financial loss. A common reason behind this is the lack of knowledge about the market.
When beginners become overconfident, they start thinking that they have become the forex expert. This kind of attitude is a big problem among newbies, rather they should analyze and spend time improving their trading skills.
There are times when good earnings and profits might instil a feeling of over confidence in a trader. But good traders will always keep calm during such situations and not give in to any impractical activity.
You become confident when you gain experience in forex and spend time on learning forex and developing strategy. But when you are overconfident about your trading practice,for sure it will lead you in losses.
HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors.
Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance.
You could lose some or all of your initial investment. Do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.
Any data and information is provided 'as is' solely for informational purposes, and is not intended for trading purposes or advice.
Past performance is not indicative of future results.