Why Human Nature Works Against You as a Trader

In this article, we attempt to look at the psychological elements of trade, risk, and money management as presented in the  Successful Traders research series.

The goal of trading is to make money by forecasting future price movements.This is inherently difficult because, as human beings, we cannot tell the future.

Surely many new traders analyze data announcements, or economic reports with the goal of buying cheaply before prices may run up, or selling ‘expensive’ before prices move lower; but those traders will often soon find out that consistent profitability is considerably more difficult than ‘out-guessing’ the market.

In this article, we’re going to approach a psychological road-block that many new traders struggle with in their effort to find consistent profitability.

Defining Trading Success

Human beings naturally recognize patterns. It’s an evolutionary trait; if a man or woman were to wander out of a cave only to get eaten by a bear, others in that cave should grow cautious of leaving.

We attach emotions to results because

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