Forex encyclopedia

Most part of beginning traders neglect psychological factor of market trading. However, over the time, everyone of them comes to an idea that psychology is 90% of trading success. Why does psychology impact so strong on resukts of trading? The main factor us that while looking at market a person percepts signals through the lense of one's knowledge and experience, which also includes fear, greed etc. Let's take two traders each made by one trade, but the first one will have profitable trade and the second one will have loss-making trade. We will analyze behavior of traders. Let's think their experience is pretty moderate and is equal. Upon making a profitable trade, the first trader will be encouraged with a successful start of the day, will think about reserve money to cover a potential loss and will have more ease in actions. On the one hand, it gives free play to looking for situations with better results, on the other, it can dull attention and as a consequence, to cause more harm than good.
By technical analysis we should basically understand employment of price chart (and results of its math interpretation) for further market and price forecast. Technical analysis rests upon repeated nature of market and implies that ups and downs of currency quotations on charts are rotated according to certain time periods. An advantage of technical analysis is its universal application: with its help one can research any financial contract for any period of time. The market accounts for everything. That means that any event, which could affect price behavior is already accounted by market and is reflected on the price chart. This proposition means that all factors impacting the price will be definitely reflected in its behavior, therefore, it is required to monitor quote graph.
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