The countdown begins. Within a month, precisely June 23rd, the British will vote to determine its future within the European Union. This is coming in the midst of doubts of what the outcome of the referendum will be.
It all really seems easy enough doesn’t it? Especially if you consider the fact that it’s not every day that you run into someone who’s a successful forex trader, you automatically conclude that there mustn’t be very many people in this field and if there aren’t many people in this field, it would be easy to rise to the top with the proper knowledge and training, correct?
Let’s say you’re a stockholder who wants to sell your stock for whatever reasons - usually the reason is that your stock is losing its value- but can’t fathom selling your stock at a time when losses might be larger. There are certain rules and regulations that if followed by traders can lead to great profits rather than selling at a loss.
Prospect theory is a behavioral theory in economics which describes the way in which people tend to choose between probabilistic alternatives that involve risk and cases where the probabilities of outcomes are known.
Every trader, at least once in his career has come across a trade setup that looks perfect at first but then when they start to analyse it, they begin to feel less and less sure about that trade. Unquestionably, it is good to study and analyse every trade setup before entering it but overdoing this process and overthinking about it can become a problem for you.
Due to the nature of the forex market, it’s easy to make or break your trading account depending on how you trade, and the nature of the trade. And because human beings are sensitive and emotional it’s quite easy at times to practically hand all your money over to the market by overtrading.