Having taught and spent time with literally hundreds of students and traders of the currency markets, it never ceases to amaze me how we can get into habits very quickly, often ones that stick for a long time and sometime ones that are not so great for us to have either. I have always recognized that the two biggest reasons why human beings struggle to trade with consistency and success overall, comes down to in my opinion, two main reasons:
1 – We allow our emotions to influence our trading decisions and money management
2 – We tend to listen to others and make calls based on what we hear, see, read and are told.
Taking into account the above points, it would be useful to apply and look into how exactly these dynamics have an effect on participants in the Forex Markets overall. Without doubt, the currency market is a huge arena and with such a large stage there is always going to be a wide amount of information available to those who are willing to look for it. However, the quality of that information and the likely impact it will have on your trading is what we really need to delve into. You see, as human beings we are more or less programmed to behave with a “herd mentality” and it is this very functioning which has undoubtedly got us to where we are in many areas of progress. Only by sticking together did we ever have a chance of achieving some of the accomplishments we have over the course of history. By sticking together and putting our energy into a single common goal, humans have progressed without question.
However, let’s for now move onto herd mentality and how that works in the Forex markets. Over the years that I have been trading, my family and friends have asked me time and time again about where the profits and losses go during the everyday activity of the markets. They know that people lose sometimes and win sometimes but what is fascinating is that they seem to think that there is a magical money pit which funds this money in the background! Trust me it would be nice if this was the case but in the bitter reality of how money is truly made and lost in the… Continue Reading
