How self-doubt can actually improve your trading

Much has been said about how confidence helps a trader execute ideas better, but a little doubt could also do some good.

“Rethinking is a skill set, but it’s also a mindset.” wrote American author and psychologist Adam Grant in his book Think again.

For most of us, our knowledge and beliefs tend to form a kind of comfort zone in which we prefer to stay rather than explore the so-called “discomfort of doubt.”

Grant explains that the act of questioning our knowledge and opinions can be unsettling because it makes the world seem more unpredictable.

“It requires us to recognize that the facts have changed, that what was once right may now be wrong.” he wrote.

In a stressful and fast-paced environment such as forex trading, one usually reverts to well-learned automatic responses, possibly failing to account for some factors that make the situation slightly different.

Of course, this does not mean that you should abandon your “trading instincts” altogether. Instead, it should aim for that sweet spot between confidence and humility.

For most traders, especially the more experienced ones, overestimating their knowledge and skills could be detrimental if it prevents them from questioning and refining their trading strategies.

In other words, thinking about trades and some degree of “impostor syndrome” can actually help improve your overall performance.

Impostor syndrome is defined as a psychological pattern in which a person doubts their abilities, talents, or achievements.

Despite external evidence of their excellence, someone with imposter syndrome has a persistent fear of being exposed as a fraud.

Grant mentions three advantages of the so-called impostor syndrome:

It can motivate us to work harder.

When we feel like imposters, we feel like we have more to prove and gain.

It can encourage us to work smarter.

When we are not sure whether we will win, we have nothing to lose by rethinking our strategy.

It can make us better students.

Having doubts about our own knowledge and abilities makes us more open to learning from others.