Every lack of confidence trader believe that profits in the markets brings the lost confidence back. Well at some extent it is true that profits brings back the confidence but relying only on the only profits brings the confidence back then it isn’t true. However it’s quite challenging in the markets to brings back the lost confidence but not impossible to get. Meanwhile there is not only one thing which gives your confidence back. But there is group of the things which make you believe again that money can be made from the markets again. And that group of things is called an execution.
Meanwhile execution isn’t only a word in trading. But it drives the success in the market. A trade can tick all the boxes before the entry but if a trader missed the execution then nothing matters. In today’s blog we are gonna talk about how execution impacts and improves trading overall.
What Execution Means in Trading
The words execution covers placing the buy and sell orders in the markets. However this isn’t enough describe the what execution really means in trading. The execution words contains set of rules to be ticked before the making the entry in the trade. And a good execution only happens when you enter just after a closing of the confirmation candle.
Pillars Of Execution
Set Of Rules: Before thinking about the execution part in the trade, the markets need to meet all your entry criteria which you defined in pre market analysis.
Waiting For Valid Setup: When it comes to the execution part, then it should be happened on the valid setup only. Like as per your strategy after every 2 candle retracement in any direction there will be a valid setup. Now execute only the setup which has 2 candle retracement if no 2 candle retracement then avoid the setup or trade.
Controlling Risk: The trade should have controlled risk according to trading account capital. Absence of the controlled risk can make the execution part worse. Because either the market may give big dent to you trading account or you can lose the trading account.
Strict Stop Loss: While stepping into the execution part of the trade. The trader always go with the strict stop loses. In the any market condition don’t try to shift the, as it disturbs the trading discipline and later on it will reflect in the execution part of the trading.
Managing Discipline: Sticking to the pre defined entry, exit price as defined in the pre market analysis. And sticking to the plan till the execution phase, completes the execution with discipline.
The Common Misunderstanding About Trading Confidence
Every new trader thinks that winning trade or the trade which ends the profits brings the confidence. Well some part of this statement is true but not fully statement is. Traders often connects confidence with profits. Meanwhile many profitable trades doesn’t even have a valid risk to reward ratio they have rr like 1:05, 0.7 something like that. This only happens when the traders want to make their decision right at any cost and believing this will bring my confidence back.
They feel the excitement joy and many other things when they are on the winning streak. When their losing streak starts they start feeling under confidence and etc. Let’s understand this topic with the points.
Incretitude: When the market start showing it’s true color with the uncertainties & unpredictability. New traders start self doubting themselves. Because these terms you won’t understand theoretical until it happens to you in the markets.
Fear: After a few losses the new traders start getting afraid from the markets. Because they start losing the profits of whatever they have made in the initial phase of the trading. Out of the fear the start calling trading a gambling, a place of losing the money and what not.
Frustration: When a new traders faces the consecutive losing streaks. This often leads them to the loss recover mindset. As a result instead of loss recovery, they start losing the funds they have left behind. This brings them into the frustration.
The Relationship Between Confidence and Trading Psychology
Trading psychology plays a vital role in trading confidence. However it’s double sword in the trading. Meanwhile it is necessary for flawless and fearless execution of the trade. Weak confidence often driven by the sudden wins etc. Meanwhile the confidence comes by following the process, lasts longer than anything. Although this confidence driven by the strict discipline followed in the every market condition. And showcases the unshakeable trading psychology.
Strategies to Balance Confidence and Psychology
Practical Ways to Build Execution-Based Confidence
Execution based confidence often comes from trusting the process instead of running behind the profits. You develop the confidence by constantly execution on the same strategy and same setup over the 100 trades.
Pillars Of Building The Execution-Based Confidence
Mastering The One Setup: Instead of trading or trying to trade the every setup, aim on the specialization of one setup. It increases the discipline which is correlated to the confidence in the trading. By implementing this method over the 100 trades. You will have the data in which session, at what time of the session this setup works best. Win ratio of this setup and etc. By the end of the 100th trade, you will be able to decide when to trade and when not. That’s how the confidence build or increases in trading.
Practice The Perfect Trade: Rather than trading with real money directly in the market. Practice with fake money or demo account, until you build discipline, trading psychology and whatever it requires to be the pro trader. Although it won’t give emotions of the real money but still it won’t make you feel less than real money, if you take it seriously.