A lot has been said about how confidence helps a trader better execute ideas, but a bit of self-doubt might also do some good.
“Rethinking is a skill set, but it’s also a mindset,” wrote American author and psychologist Adam Grant is his book Think Again.
For most of us, our knowledge and beliefs tend to form a kind of comfort zone where we prefer to stay in instead of exploring the so-called “discomfort of doubt.”
Grant explains that the act of questioning our knowledge and opinions can be unnerving since it makes the world seem more unpredictable.
“It requires us to admit that the facts may have changed, that what was once right may now be wrong.” he wrote.
Under a stressful and fast-paced environment such as that of forex trading, one typically reverts to automatic well-learned responses, possibly failing to account for some factors that make the situation slightly different.
Of course this does not mean that you should drop your ‘trading instincts’ altogether. Instead, you should aim for that sweet spot between confidence and humility.
For most traders, particularly more experienced ones, the overestimation of their knowledge and skill could be harmful if it prevents them from questioning and refining their trade strategies.
In other words, having second thoughts about your trades and some degree of ‘impostor syndrome’ could actually help you improve your overall performance.
Impostor syndrome is defined as a psychological pattern in which an individual doubts their skills, talents, or accomplishments. Despite external evidence of their excellence, someone with impostor syndrome has the persistent fear of being exposed as a fraud.
Grant mentions three upsides to the so-called impostor syndrome:
- It can motivate us to work harder. When we feel like impostors, we feel like we have more to prove and earn our merit.
- It can encourage us to work smarter. When we’re not sure if we’re going to win, we have nothing to lose by rethinking our strategy.
- It can make us better learners. Having doubts about our own knowledge and skills makes us more open to learning from others.