Have you ever heard about LTCM hedge fund? It was run by Myron Scholes and Robert Merton, 2 professors which got Nobel Prize in economics in 1997 for the new formula to determine the value of derivatives. One year later LTCM went bankrupt.
Accident? Rather not. Probably you know or heard about intelligent and successful layers, doctors, engineer or managers which lost a lot money on Forex.
On the other hand there are successful traders like Nial Fuller who has never went to college.
What is the reason? Why many intelligent people lose on Forex with traders without any university or college degree?
How to make the best decision?
Before I answer that question I must tell you about some scientific experiment. It was on University of Amsterdam which is among 100 best universities on the world.
Participant of this experiment were divided on three groups. People from the first group had to made their decision immediately. They had no time to consider any issue and they had the worst results.
People from the second group made long analysis before they made decision. They had better results than people from first group but still most of them were wrong! Experiment showed that if you make long analysis after some time of thinking you stop controlling yourself. You focus only on few issues and make decision based only on them. Unfortunately you don’t consider other issues which are also relevant.
People from the third group were manipulated to make their decision based on their intuition. Participant from that group considered all relevant issues. They had much better results than other groups.
How does it deal with Forex?
What is the connection between that experiment and Forex? Intelligent and successful professionals like layers developed habits which gave them success in their job. They gather data, analyze it and find the best solution.
They apply this habit on Forex. But on Forex it doesn’t work! You can spend one year on gathering data before you take one trade. But then it starts working process from the experiment. You focus on random piece of information, ignore other issues and make decision based only on that.
Probably you say something like this.
“Price just crossed the moving average so I am buying. I noticed that strong resistance line. But I am sure that price will break it.
Oh no! It has not. I lost again. How is it possible?”
The solution
So what can you do to deal with these problem? It is a longer process which will take more than one day or week. But in the first step you can you use solution from my free report about trading psychology.
In nutshell: do not blame or punish yourself because of your mistakes. It is not your fault and if you do it you will only enforce your inefficient habits.
Observe and accept your mistake. When you do it your judgment and decisions will be more rational and profitable.