Building confidence in a personal trading strategy is an important aspect that all traders should possess. A large number of prop traders suffer with self-doubt, and fear because they are unfamiliar with their trading strategies.
While prop trading adds unique challenges like managing the firm’s capital, strict performance metrics, and peer pressure, prop traders are required to observe patience, discipline, and emotional control to build trust in their strategy,
This article will discuss tips and tricks, along with a brief walkthrough on how to build confidence in your personal trading strategies.
To be able to trust your strategy, prop traders must first come up with one that suits their trading style and timeframe. Prop traders should make sure to include every angle possible and then make sure that they keep making minor changes along the way, according to the requirements.
Some key elements to include in any prop trading strategy are entry and exit points. Prop traders should make use of technical indicators, or price signals to open or close trades. Apart from that, prop traders should also make good use of risk management tools to prevent and minimize losses that can be caused by miscalculating and misjudging a price movement.
After a suitable prop trading strategy has been made, traders should make sure it is reliable by back-testing it with previous data and seeing if it has been successful an acceptable number of times. Along with also making sure to implement the strategy on a demo account to make sure it is applicable in real-time trading.
Along with that, prop traders should keep a journal with them to record results and keep track of weaknesses and aspects that should be worked on. Prop traders should also possess an understanding of their win rates and risk-reward ratios to further build confidence in themselves and eventually their strategy.
Managing emotions also plays an important role in building confidence in a prop trader. Once a trade is placed, traders should trust their strategy and refrain from interfering since it might lead to mistakes and inefficient profits.
Building trust requires prop traders to trust in their decisions without overanalyzing price charts, events, and other predictions. Prop traders should also know that losing on trades is inevitable and a part of the process, and they should learn from their mistakes and prevent them from reoccurring.
Prop traders should not be shy about starting small. Using systematic position sizing and risk management can help. Start with smaller positions like:
Many prop trading challenges give traders much larger capital than they’re used to trading with. It is important not to give in to greed and become overconfident. Slowly growing trade size helps in building confidence and trust in one’s trading strategy.
It’s ok to not follow the challenge’s parameters and stay under them if you are more comfortable that way.
Confidence comes from regular practice and implementation of one’s trading strategy which should be tested and proven to produce results. Make sure to make decisions using market data and not let emotions come between them.
That being said, Mockapital is welcoming talented traders to take on challenge and journey as prop traders. If you’re ready for it. join the Mockapital Challenge today!
