Sometimes your behavior patterns are the result of subtle effects. Prejudice can affect your judgment to the extent that your decisions may contradict all conventional wisdom
Everyone has preconceptions. They play a huge role in everyday life. You can buy a specific product at the supermarket because it is a recognizable brand, or you are reading a specific newspaper because it supports what you already think.
It is impossible to completely get rid of bias, but if you know how it might look, you have a much better chance of reducing the impact on your trading.
Representative bias: let's say you observed a recent uptrend. You are engaged, in this case it pays off. You will see the same market later, following an almost identical trend. Due to the bias of the representative, you assume that if you close the same deal again, you will repeat. But even if the two transactions are similar to the surface, it is important to consider each circumstance uniquely.
Negative bias: looking back at a previous deal, you can just see what went wrong. A particularly difficult loss or series of losses will overlook any of your positive results - and the positive decisions that led to them.
Misconception about gambling: if the market grows for three consecutive days, the misconception about gambling indicates the likelihood of its growth on the fourth day. But beyond your imagination, there is nothing to relate past events to future events.
The status quo is biased: instead of searching for new ideas, you may be tempted to use those that have been successful in the past - even if they are no longer objectively worthy.
Confirmation bias: You can be sure that the stock market will grow. With a rejection of confirmation, you only see news and information that supports your view, and look at everything that contradicts this.
Deviation from aversion to losses: it will not close a losing position and will continue to trade in the hope that it will ultimately pay for itself. This is similar to a donation bias, since you see that the deals you made have much greater potential than you decided not to make. In any case, when the price moves against you, you will not want to abandon it.
Flock of deviations: human nature - to do what everyone else is doing, and traders, like everyone else, are faced with this. You must be confident in making decisions based on your research and your trading plan - and stick to these decisions when you make them.
Emotional traits of successful traders
In this course, we looked at how to control emotions that can be harmful to traders. Therefore, let's now consider the personal characteristics that you should strive to develop if you want to get the best in your trading:
Be aware of prejudice and find out how it can affect you.
We all tend to think in a certain way, but try to be as objective as possible when you trade.
Successful traders are usually calm and disciplined. They know their boundaries and follow a clear plan to achieve their business goals.
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