Every individual has been taught in life that confidence in one’s beliefs and concepts is extremely crucial to success in all walks of life. This is why when an individual begins his career on the foreign currency exchange, he begins with the preconceived notion that any kind of doubt will be detrimental.
However, scepticism is a key weapon in a forex trader’s repertoire. It is scepticism that allows the trader to question his personality, his beliefs, and each of his actions to a point where he becomes perfectly suited to trading on the foreign exchange.
The Need To Be Sceptical
Overconfidence is a major problem for any trader who is looking to make a career out of trading on the foreign currency exchange. Overconfidence can make traders feel like they are in complete control of the market and this causes negligence during the trading process. Resultantly, the traders end up making extremely costly mistakes.
Healthy scepticism which means questioning crucial decisions can prevent overconfidence from setting in and keeping a perfectly profitable trading process from bringing in the profits that it can on the foreign exchange.
Opportunities Are Easy To Track
Overconfidence essentially sets in on the foreign currency exchange because opportunities are fairly easy to track for even the newest of traders. A trader can easily spot a trend in the forex market and see it grow from something small to something significant.
When traders can spot trends in the market then they start believing that if they have placed traders on the basis of their findings then they would have made money easily.
Monetising Opportunities Is Difficult
Unfortunately, while spotting trends on forex charts is easy, it can be extremely difficult for a trader to monetise those trends. The reason for this is that the moment a trader decides to place trades on the foreign currency exchange on the basis of what he has spotted on his forex charts, doubt creeps in because this time real money is involved. Even the likelihood of losing can come in the way of a trader looking to monetise opportunities in the market.
Meaning Of Unrealised Profits
Scepticism will be natural for a trader if he understands the concept of realised and unrealised profits. Unrealised profits are those profits that a position has gained on the foreign currency exchange while still being active in the market. When positions are closed and they were carrying profits then they become realised profits fairly quickly.
Verifying All Facts And Concepts
The result of healthy scepticism is that the trader becomes extremely careful of every movement of forex rates on the foreign currency exchange. In addition and more importantly, the trader also becomes extremely careful of his own decisions to a point where he starts to verify all facts, concepts, and perceptions through various ways.
This verification of crucial aspects of trading on the foreign exchange means that the trader gradually weeds out mistakes from his trading process which boosts his profits.