I think most traders are correct in the direction they chose, they just don't trust themselves to commit to that trade, according to their plan. Why do some traders learn very quickly and become profitable, others it takes awhile and then they get it, or they just end up quitting? It has to do with them having the conviction that their system is going to work and they hours and hours they spent researching and analyzing is pushing them on the correct side of the market. There have been a bunch of times where I was correct on price movement, but didn't commit and follow through with my plan. I had the correct position sizing, my research and analyze was on point, and I thought I had the belief, faith, trust, and conviction I needed. But, I ended up losing tons of money, only to see price push in my favor, and me standing in the corner to think about how dumb I was.
It all begins with a thought and idea as to what the next move in the market will be. Are stocks, currencies, crypto, and so on over priced and you see that price could possibly be topping? Maybe your research and analysis tells you that it is highly likely that it is. That idea turns into a belief that you act upon and decide to get in. Price starts to push higher. Your position sizing is good so you continue to hold. Price continues to push higher. You now start turning that belief into faith that price will push your way. Price continues higher. You start doubting yourself and don't trust in your research and analysis and start to question it and yourself. What will you do? Hedge? reduce your position? Add to your position? Keep holding? Eventually you exit and afterwards, price starts moving in the direction that you had determined it would.
That belief and faith was not strong and you didn't have trust in what you researched and analyzed, so that never turned into conviction.
What is belief? trust, faith, or confidence in someone or something
What is faith? complete trust or confidence in someone or something
What is trust? firm belief in the reliability, truth, ability, or strength of someone or something
What is conviction? the quality of showing that one is firmly convinced of what one believes or says
Without conviction, it will be difficult to succeed in figuring out the trading puzzle. It is not blindly pumping yourself up and just saying, "yup this will go up," it's knowing that you put as much in your favor as you can (Fundamentals, Technicals, Market Sentiment, Position Sizing, Conviction) that you commit to seeing your trade through if it is according to your plan. There are plans that created, and worked on for hours, to only be thrown out because it did not work out for a few trades. The first thing that needs to be done, is building that conviction in your plan and in yourself, that you will be able to learn, excel, and improve your system, before committing money to trading.
A small story I have for one of the trades, was in 2019 when I was trading the GBP in the beginning. The GBP was trading above the 1.30 lvl and the UK was going through Brexit. I had determined that price would push lower after conducting hours and hours of research. My price target was 1.20 (based off the dealing with Brexit, Teresa May possibly resigning, and the FED raising rates, the monthly chart showing a descending wedge, sentiment in favor of the USD and against the GBP, and my belief that price would push lower). I got in at above 1.30 a few times, exiting when price hit my 2% threshold. After a while I gave up. Only to come back afterwards, and exit with same profits. Eventually I focused on another pair, only to see the GBP push over 1000 pips lower, below the 1.20, surpassing my price target. After the move lower, I had determined, again with hours and hours of researching and analyzing, that price would push higher. I had levels, that if broken, I would add additional positions on the long side. The UK Government was determining who the next prime minister was going to be, since Teresa May had resigned, and since the Boris Johnson was determined to be the next prime minister, this was good for the GBP. I thought price would push higher, with my target at 1.35, which price did, and of course I kept getting in and out and getting into other pairs because I kept doubting myself and the conviction was only hope.
If you don't have the conviction you need in your trading plan, build it up until you do. You can only do this by sticking to one plan and improving it. Have that conviction in your plan that you know you will commit to the trades you place and see it through.
It all begins with a thought and idea as to what the next move in the market will be. Are stocks, currencies, crypto, and so on over priced and you see that price could possibly be topping? Maybe your research and analysis tells you that it is highly likely that it is. That idea turns into a belief that you act upon and decide to get in. Price starts to push higher. Your position sizing is good so you continue to hold. Price continues to push higher. You now start turning that belief into faith that price will push your way. Price continues higher. You start doubting yourself and don't trust in your research and analysis and start to question it and yourself. What will you do? Hedge? reduce your position? Add to your position? Keep holding? Eventually you exit and afterwards, price starts moving in the direction that you had determined it would.
That belief and faith was not strong and you didn't have trust in what you researched and analyzed, so that never turned into conviction.
What is belief? trust, faith, or confidence in someone or something
What is faith? complete trust or confidence in someone or something
What is trust? firm belief in the reliability, truth, ability, or strength of someone or something
What is conviction? the quality of showing that one is firmly convinced of what one believes or says
Without conviction, it will be difficult to succeed in figuring out the trading puzzle. It is not blindly pumping yourself up and just saying, "yup this will go up," it's knowing that you put as much in your favor as you can (Fundamentals, Technicals, Market Sentiment, Position Sizing, Conviction) that you commit to seeing your trade through if it is according to your plan. There are plans that created, and worked on for hours, to only be thrown out because it did not work out for a few trades. The first thing that needs to be done, is building that conviction in your plan and in yourself, that you will be able to learn, excel, and improve your system, before committing money to trading.
A small story I have for one of the trades, was in 2019 when I was trading the GBP in the beginning. The GBP was trading above the 1.30 lvl and the UK was going through Brexit. I had determined that price would push lower after conducting hours and hours of research. My price target was 1.20 (based off the dealing with Brexit, Teresa May possibly resigning, and the FED raising rates, the monthly chart showing a descending wedge, sentiment in favor of the USD and against the GBP, and my belief that price would push lower). I got in at above 1.30 a few times, exiting when price hit my 2% threshold. After a while I gave up. Only to come back afterwards, and exit with same profits. Eventually I focused on another pair, only to see the GBP push over 1000 pips lower, below the 1.20, surpassing my price target. After the move lower, I had determined, again with hours and hours of researching and analyzing, that price would push higher. I had levels, that if broken, I would add additional positions on the long side. The UK Government was determining who the next prime minister was going to be, since Teresa May had resigned, and since the Boris Johnson was determined to be the next prime minister, this was good for the GBP. I thought price would push higher, with my target at 1.35, which price did, and of course I kept getting in and out and getting into other pairs because I kept doubting myself and the conviction was only hope.
If you don't have the conviction you need in your trading plan, build it up until you do. You can only do this by sticking to one plan and improving it. Have that conviction in your plan that you know you will commit to the trades you place and see it through.