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Humans have really strong tendency to sell assets which brought them profit and avoid to sell those which has shown loss. This reaction is called disposition effect and has major impact on most of trader’s trades. To explain this situation, scientists said that, in general, we avoid grief caused by losing transaction and we are aiming to reach pride caused by wining one. The main question is: Does closing early profitable transaction and keep increasing loss make reasonable trading?

Defining the problem

Every trader should check if he or she undergoes a disposition effect. Identifying problem may help optimizing trader’s outcome.
There are three questions you have to answer and if you answered yes to one of these questions you probably ended up trapped in disposition effect, keeping open losing positions when loss is only increasing in time:
1. If the price will return from the loss to break even point I am going to sell this position.
2. Loss is so big at the moment so I won’t close position because rebuilding capital will take too much time.
3. I will keep losing position because loss is so big it cannot go any bigger further.
How to prevent yourself from bei
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Natalia_Kisenko avatar

good job!

VALTRAD avatar

Правильно написано

Mattie avatar
Mattie 1 Sep.

Spend more time managing your winners than losers. Stop loss orders work for losing trades and GTC orders work well to capture profit when you do not have time to stare at the tape action all day.

yellownight avatar

good luck

Aaamira avatar
Aaamira 4 Sep.

good article!

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All traders meet disbelief on their strategy when they keep losing. In most of the cases traders will shift to other strategies. I also did the same. After sometime I understood that it is not about strategies but about psychology. Of course there is no strategy that gives 100% true signals. They give around 60-80% true signals which are more than enough. But in spite of these percentages we keep losing. The reason for these failures is character and psychology. In this article I will share my mistakes/reasons that make me lose. I reflected my trading method in my article one currency master trading.
Wish to catch the trend earlier
By analyzing my trend history I found that I don’t wait completion of all criteria. At the end I lose.
My trading method says that trend end is near when ADX falls and MACD shows divergence. But for us to be able to sell here in chart, 21 EMA and price have to be below 144 EMA. I saw ADX and MACD signals and decided not to wait EMA signal and lost money two times.
Losing focus and deviation from method
When I am concentrated in one direction I can lose focus and can’t see signal.
Price reached the highest point. It touched resistance level and I had a…
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rinaa avatar
rinaa 30 Apr.


Rosie avatar
Rosie 30 Apr.

интересно и познавательно

Wovch avatar
Wovch 30 Apr.

well done!

Ne_juli avatar
Ne_juli 2 May

Good job , thanks that you shared so interesting information

rashadali avatar

Dear Friends!  Thanks for you support!  This article, with your support became the winner of April article contest! You are best of this community! )

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Year 2017 is closing and I am in mood for some light-hearted banter yet to write meaningful article. So here I go talking about some behavioral economics and its implication on forex trader and his trading. Behavioral economics in essence is a method of analysis that applies psychological aspect of human behavior on economic decision-making.
Although the terms mentioned in this article have wide implications in different economic decision making process, I will keep the scope of these terms to forex trading and investing only.
  • Framing

Fig. 1
Framing refers to how a trader perceives a forex movement of a pair. It’s a glass half full or glass half empty kind of situation(same as above comic strip). In last 2 weeks gbp/nzd is correcting from 1.98 to 1.90 zone. So when price retrace to 1.93, a trader may think, wow the pair is at 3% discount and will try to buy only to find price go even lower. So it is important to see that pair is in strong corrective mode after more than 10% rise in last 2 months.
The key is to perceive the market correctly and never feel that “I am most intelligent”. Follow technical’s and wait for the pair to form a support/resistance in strong correction / r…
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Yuliya_N avatar
Yuliya_N 3 Jan.

Very nice article. Good job friend!

Annyrio avatar
Annyrio 3 Jan.

Very good!!!

hrustiashka avatar

Well written article!

Vlad73 avatar
Vlad73 8 Jan.

well done

Siarhei89 avatar
Siarhei89 14 Jan.

good article!!!

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A typical conversation with a ‚Wannabee’ pro trader goes like this:
Me: Soooo, what’re you doing?
Wannabee: I’m gambling on forex ????
Hahaha… no.
This statement is apparently innocent and most Wannabees tell it as some sort of a joke, but the truth is – it’s a dangerous one. Do you know why? Because it shapes your actions. Yes, the way you think and talk about yourself shapes your actions.Have you ever talked to a professional trader? If you ask one what does he do on forex, he will tell you:I’m making money.Notice the difference? He is totally aware of the risk and he knows he’s gonna lose some money in the process, but, he still states that he earns money. You will never hear him calling himself a loser.There’s a reason to why professional traders make money on Forex – experience, good trading methodology, good risk management etc, etc. But there’s also one factor that usually slips away unnoticed.
Have you ever talked to a professional trader? If you ask one what does he do on forex, he will tell you:
I’m making money.
Notice the difference? He is totally aware of the risk and he knows he’s gonna lose some money in the process, but, he still states that he earns money. You will…
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gargantua avatar
gargantua 21 Apr.

very interesting

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Most new traders revel in leverage. They seek out brokers who provide high leverage, deposit a small amount of money and dream of the riches they will make. This is very delusional of course. But the subject of leverage seems to confuse a lot of professional traders and brokers alike.
Does Leverage Magnify Returns as Well as Losses?
It is often said that leverage can increase your potential returns and your potential losses. What is often missed if that this is not a linear relationship. While you can increase your returns with more leverage, it comes a point when this is counter-productive. In other words, past point X, for 1 unit of risk you don’t get a 1 unit of return anymore.
The Gremlins of Volatility
This asymmetric return works in three ways. First, increasing leverage always increases the volatility of your trading returns. These are our first gremlins, the gremlins of volatility. Take a look at our first picture below. This simple table showcases two hypothetical systems A in the first column and system B in the column below it.
System A makes 20 percent one year but loses 10 percent the next. System B on the other hand consistently makes 4.5 percent each year. Obvi…
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killer195175 avatar

good observations.

Beto avatar
Beto 3 Apr.

Very interesting information

ghfran avatar
ghfran 3 Apr.

nice one )

FXRabbit avatar
FXRabbit 5 Apr.

^_^ Gremlins

samymahrous avatar

great article

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To be the master of trading is to be master over oneself. Novice traders still have losing trades regardless of what they have studied and acquired skills on technical analysis tools, fundamental analysis, pattern recognition, candlestick signals, and indicators.
Only the way one can start trading consistently successful is to work out and discipline yourself and learn the psychological issues, risk and money management areas. We are not aware of how psychological aspects influence us strongly. I will explain you a brief overview of the main psychological phenomena, relevant to trading, described by Mr. Lars Tvede in his book titled “The psychology of finance” that cause you to fail or succeed. (entered the table due to no possibilities to design table in the format)
Unless we know what kind of force acting in our mind, it will be very difficult to work it out. Be aware of our psychological false reasoning and try to be as objective as possible. When we can think as objectively as possible is to trade with comfortable risk management. Do not bite too big that you cannot chew, but enjoy it is taste with proper risk management and psychology. The theories I listed above have a univer…
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sonjatrader avatar

nice article

Beto avatar
Beto 13 Dec.

Good info, invest on Forex market is more about mindset that technique.

VictoriaVika avatar

Good article :)

Natalia_Kisenko avatar

well done!

yellownight avatar

good luck in contest

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Sometimes or many times our daily trading plan doesn't go the way we want even making the efforts to get high results.
Maybe reading the charts, checking the fundamentals and setting up the entries with proper stops and realistic limits but without isn't in sync between our actions and mind to make the winning decisions.
I have read few books about forex market and found helpful information to work the emotional area on my daily trading.
This article is focused on people interested in information about mindset and also can contribute in personal life.
There are wide pages of chapters talking about it, but I want to make a summary more like a handbook and the information provided
here has taken it on the "John Wiley & Sons Australia, Ltd" in your book "The Wiley trading guide".
We can send positive messages to our unconscious mind by making a simple but powerful process before to start the day focusing on two main thoughts.
  1. Remarking the event.
  2. Remarking the day.
Remarking the event:
To make this we need to think about two events no matter the time of the day:
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sonjatrader avatar

Very interesting article

FXRabbit avatar
FXRabbit 5 Dec.

Good article!

rupesh1984 avatar

yes, tough to control ur emotion and tough to get ur mind ready to accept the truth no matter what scenario in mkt but 4C everyone know but each time u loosed for next time u commit ur 4C but again when u enter in trade u forgotten back :D

Natalia_Kisenko avatar

well done!

WallStreetBlog avatar

Muchas gracias por este artículo!

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I strongly believe in psychology and optimum mindset for trading success. It is way above technical indicators and perfect trade up. I have had very good setup and I did prematurely booked profits so as to not lose small profit or fear that trade will turn into loss. It is all mind game. Mind tricks us. Also we have to have big heart to accept profits. But generally traders accept small profits and big losses. Imagine these scenarios
  • You see breakout from range and then take the right trade. But after some time you close the trade in little loss because you thought this is false break
  • Doubled down on a losing trade
  • You see one trade which you thought of but did not took only to see it in direction of profit and then you jump in to fear of missing out only to lose.
Now I will touch base a little on Mindfulness with a recent example. Mindfulness technique of meditation is helpful to stay aware in present and it can be used in Micro or Macro level events. As you know trading is very dynamic and every minute trading base rate changes. Reacting to events being aware of micro and macro level reality is the key to be successful in trading. And it is better to be aware of our own interna…
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Yuliya_N avatar
Yuliya_N 30 Sep.

So interesting! I will try to use it!

Granchio avatar
Granchio 2 Oct.

ottimo lavoro

valter avatar
valter 2 Oct.

отличная работа

vikyllya avatar
vikyllya 5 Oct.


Sasha_spicy avatar

psychology and optimum mindset - 90% for succsess in trading.
good article, thank u!

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In year 600 Pope Gregory compiled a list of seven deadly sins, which included pride, greed, envy, wrath, gluttony, sloth, and lust. Based on these I have come up with a list of cardinal sins of a trader, which would be characterized as pride, greed, envy, anger, lack of moderation, laziness, and doubt. As you can see, the trader’s sins are pretty much the same as those compiled by the Pope.
Some of the richest people on earth have one trait in common, they are humble.
Warren Buffet, for example, has pledged that he will donate 99% of his staggering $47b fortune to charity, he still lives in his $30k house he bought 50 years ago, doesn’t have a yacht as he believes it is a “toy”, has $100 in his wallet and two ordinary cards.
I heard about this trader, he went on a spree of profitable trades, something like 96% of trades in green, making homerun after homerun. Then pride kicked in. He started telling friends that he is the best trader in the world, that nobody can match him, later jokingly telling his friends to worship him as their guru. That is when the tables suddenly turned, he started hitting one loss after another. Soon he gave back all the profits he …
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Tasha_Mk avatar
Tasha_Mk 7 Apr.

very funny pics=)

yellownight avatar

sinless be difficult

Natalia_Kisenko avatar

great article!

varunk80 avatar
varunk80 30 May

its a cycle of every trader.

sashulik avatar
sashulik 31 Aug.

good article

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The reality is that most people are lose their money at the forex market ... The question is, how good looser you are?
If you are not first day at the Forex market, you know what is drawdown and that drawdown periods are unavoidable, whether you work in the old way, manually or using a robot.
However, the long periods of drawdown simply killing, people start to doubt your system and modify endlessly, thus cause even longer periods of subsidence, and in the end, their patience is broken, and they leave this trading system, moving on to the next one. Many are well aware that trade without subsidence is impossible, but still lose their heads as soon as the drawdown is slightly delayed.
This moment is forcing people to look for systems with long periods of profit, which usually ends with abruptly deep subsidence (a simple example - Martingale, Scalping). That is why dangerous strategies have such a large fan base, especially among the newcomers - there is no need to endure long periods of subsidence. Such systems show a very steep yield curve with hundreds or thousands of percent, which always ends in one or more devastating recessions.
The use of such systems by newcomers leads to
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yellownight avatar

first picture))

yellownight avatar

sore point  - about  losses

fx211pips avatar
fx211pips 25 Mar.

great article! A trader should focus on how much he/she can lose instead of how much can be won.

kstubun11 avatar
kstubun11 25 Mar.

thanks for your advice

geobio66 avatar
geobio66 27 May

жизнь - это волновой процесс. нужно уметь определять положительные аномалии. тогда неудачи превратятся в удачи

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An important step in the creation and / or use of the developed strategy is to check for compliance between the trading system and your psychology.
Some may be surprised to ask: why is it so important for trade?
The answer is simple...
Forex traders LOVE to break the rules!
All traders of the Forex market are violators of the rules, or were so in the past.
Apparently, the much more easier to break the rules, rather than comply with them, but later about this.
First of all, let's discuss what constitutes a violation of the rules.
To act on your own discretion or based on certain rules?
There is a difference between 100% compliance with the rules of your strategies and following of the trading systems that allow traders to take arbitrary decisions.
The system of strict compliance with the rules of each step in the trade is based on the unquestioning compliance with the rules. If any part of the strategy is not carried out, it is immediately and automatically regarded as a violation of the rules. The advantage of these systems lies in the fact that is easy to assess whether the trader complied with the rules correctly. The downside is that the strategy does not provide for t…
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k9n7 avatar
k9n7 23 Mar.

that's so certainly true!

yellownight avatar

dont move stop - very hard

fx211pips avatar
fx211pips 25 Mar.

very good article! rule no 1 - follow your rules rule no. 2 - look at rule no. 1:)

BilboFX avatar
BilboFX 25 Mar.

Nice article and good reminder !!!

Kivetat avatar
Kivetat 19 Apr.

Very creative job))))

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1. Introduction.
Vous est-il déjà arrivé de voir ce qui n'est pas ?
Nous analyserons dans le présent article l'impact des biais cognitifs sur les performances de l'investisseur et passerons en revue les principaux biais cognitifs, les erreurs et conséquences généralement observés dans de telles situations. Cet article a pour but d'aider à reconnaître ces biais cognitifs pour les éviter et prendre ainsi les meilleures décisions dans votre activité de trading. Commençons avant tout par définir ce qu'est un biais cognitif.
2. Définition.

La cognition désigne l'ensemble des processus mentaux lié au savoir tel le raisonnement, l'intelligence, la mémoire et le langage. Il regroupe les activités psychiques en lien avec le traitement de l'information et se distingue de l'affectif qui lui se rapporte aux émotions.
Un biais cognitif, ou biais psychologique, est un mode de pensée qui dévie de la pensée rationnelle. L'ensemble de ces biais répond au besoin de l'individu d'apporter un jugement rapide par des raccourcis cognitifs et a pour l'essentiel trois causes :
1. Limites des ressources cognitives :
  • limites au niveau du temps disponible à la réflexion
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al_dcdemo avatar
al_dcdemo 17 Mar.

Useful content, nice presentation and very well written. Nice job!

CharmingRimma avatar

so good!

Olkiss70 avatar
Olkiss70 25 Mar.

very interesting

Yulia10 avatar
Yulia10 25 Mar.

useful article!

s_amira avatar
s_amira 8 May

Good article, thanks.

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What drives us human beings? what is the force that drives each and every action we make?
The answer is simple: Emotions.
Emotion leads us in a way we cannot explain. from simple choices like eating a chocolate bar, to more complicated ones like asking a girl on marriage, our emotions, our feelings, are there playing their big part in the decision. There are two emotions that surpass all others: pain and pleasure.
Have you ever wondered why you eat that burger although you know that you are on a diet? or maybe why on your childhood you preferred to play rather than study?
We are often focused on instantaneous gratification that our short-term solutions eventually become long term problems. we naturally link pain or pleasure to almost every event in our life. And these connections we make will influence future decisions on similar events. If you ever had a car accident, you don’t want it to happen again, so you fear it, you fear the pain it caused to you, and this makes you drive more cautiously or maybe stop driving at all. And there are those who fear driving not because they had an accident but they fear it might happen. Their fear controlled them.
These feelings are very powe…
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tdbatinkov avatar
tdbatinkov 10 Mar.

yes my friend Arapip , the psychology is most important part of the trading success

tdbatinkov avatar
tdbatinkov 10 Mar.

great article, well done :)

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Уважаемые участники сообщества умных людей Dukascopy, хотел бы поделиться с Вами небольшим исследованием результатов голосования конкурса фундаментального анализа. На это исследование меня подвигло прочтение статьи участника сообщества salamandra "фундаментальный анализ - бинарные опционы". В статье приводилось использование оценки перевеса голосования для открытия сделки в бинарных опционах в направлении, за которое в конкурсе фундаментального анализа проголосовало большинство. Меня заинтересовали следующие вопросы - действительно ли большинство чаще угадывает направление движения курса после публикации новости, чем меньшинство, и , если чаще, то насколько. Именно на эти вопросы я и попытаюсь ответить.
Данные для статистической оценки

Мною были собраны данные о 201 событии конкурса фундаментального анализа с 6.10.2015 по 8.01.2016, включая результаты голосования, а также результаты самих событий. Фиксировалось количество проголосовавших за рост курса, количество проголосовавших за падение курса, за какое направление голосовало большинство (в случае равенства голосов, большинство не фиксировалось) и собственно результат события - рост или падение курса. Полученные значения…
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Daniil_Stolnikov avatar

Я сразу понял что тут 50 на 50 без всяких исследований ))

Natali_Niyazova avatar

Хорошая работа проделана! :)

wisdom_consultant avatar

good article!

al_dcdemo avatar
al_dcdemo 15 Jan.

A part of the events that went against the majority were probably the ones that were priced in, as you've already pointed out. I would say expanding the sample would probably lower the ratio but one would need to test it. Interesting content, great explanation and very well written!

Olkiss70 avatar
Olkiss70 31 Jan.

интересное исследование с несколько неожиданными для меня результатами

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PSYCHOLOGY of "Exhausted Trend" Trading StrategyTraders are very conservative in opening the positions and very aggressive in closing , if should keep the profit.
Every financial Instrument , no matter of its Time Frame is in one of those two modes : Trend or Range .In Trend mode , the price makes a significant big movement in relatively short time period . This is an Impulsive movement . In Range mode - the opposite - in long time period the price makes small movement , often a correction .
Description of the Trend Looking closely at an Impulsive movement in lower time frame it is essential to be determined the Price channel - that channel the price is within . For example, in an Upward channel ( in Downward channel - the opposite ) the price makes local Tops and Bottoms where the every next Bottom is higher than the previous one and the every next Top is higher than the previous one . The most important line is Lower Upward Support Trend Line where the price find support and bounced off . The Trend is changed to downward when that Line is broken and the price start making lower Bottoms and lower Tops . Psychological description of the Trend development . Traders
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DianaLua avatar
DianaLua 8 Feb.

Really interesting, amazing and well made article :D Always a pleasure to read interesting stuff.

tdbatinkov avatar

Thanks my friends for your support

khalidamassi avatar

Wonderful, full support for great one

tdbatinkov avatar

Thanks my friends for the support

frazjee83 avatar
frazjee83 17 Mar.

nice brother good luck

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