As a trader you are going to be faced with countless issues. There is the trading world itself, fraught with risks and uncertainties. There are other traders who will be having an impact on the way you think as you might easily be tempted to do what the majority of doing. There is your own mind which will be telling you to act in a certain way, and yet your perceptions, emotions and sentiments may be trying to sway you in a different direction. There is the fear of losing money, which will possibly make you over cautious. Or else your ego which makes you take un neccessary risks because you are too sure of your judgment. All of these aspects are going to affect you in various ways and it is thus going to be very difficult to ensure that you make a well informed decision that will turn out to be the best one.
However besides all of these factors there is also a very powerful underlying factor which will be there throughout. This is your self-esteem. This is basically how you feel about yourself. How do you perceive your skills and knowledge as a trader? How sure of yourself and particularly of your judgment you are? How tempted do you feel to doubt your thoughts and to reconsider your actions? Do you take too long to make a move, only to end up being too late? Your self-esteem is going to be there practically just like an underlying foundation for your decisions in the trading world. And if you do not manage to consider its presence, and its effects, you might easily end up making erroneous decisions often.
Overcoming self-esteem issues is critical if you want to be able to trade successfully. Subconsciously we estimate ourselves, by evaluating our personality, our skills and capabilities – and we may either over estimate ourselves or under estimate ourselves. This is what self-esteem is all about. As a result of this evaluation of oneself, one develops an attitude towards oneself. Hence a balanced self esteem is key if one wants to trade successfully.
Being aware of one’s self-esteem and learning how to control that attitude towards oneself is imperative to make good choices and to stand by them. Self-esteem has a large impact on how confident one feels of his or her judgment. So if one has a high self-esteem he is going to be too sure of himself, and chances are he does not spend much time or place much effort to evaluate the situation and to make an informed decision. Over confidence is not healthy as one will simply be following his/her ego and not the data, or the market direction, which are of the essence for the trade.
On the other end of the spectrum, a trader with a low self-esteem feels unsure and cannot manage to trust his/her judgment, and as he/she constantly wavers in the decision to be made, wrong decisions or a lot of procrastination often occurs. Low self-esteem induces fear. It makes one feel fearful of choices and results, and this is very bad for a trader because the lack of taking at least some risk is not healthy at all. Often traders who have a low self-esteem end up simply following suit. They try to see what other traders are doing and to ask for advice from others, and act accordingly. Such trading practices often end up backfiring because one cannot always seek comfort in following the mass thinking, and often such traders never even bother to do any research or evaluation as deep down they know that they will not trust their judgment.
Thus, both a high and a low self esteem are unhealthy and very risky for a trader. Developing the insight of having a balanced self-esteem is not easy. One needs to be disciplined and able to understand oneself. It is all a pshycological venture, and as all other psychological attempts it is not a simple thing to master at all.
The best way to try to build a healthy level of self-esteem is to try to focus on the data that is available, as well as the research that can be conducted to try to make a rational and wellthought-out decision. Backing up your decision with knowledge, research and planning can greatly improve your reassurance and the amount of risk you take can be more healthy. It is also very important to accept losses as they are normal. You cannot blame yourself and keep thinking negatively about that trade, but rather try to assess what happened so as to learn from it. Through practice and patience, as well as a proper level of discipline, one can improve his/her self-esteem and consequently, his/her trading practices.