HOW CAN YOU BE EASILY BETTER TRADER?

Forget the past. I would say forget the losing position and forget much faster the winning one. Why? Because our memory is our biggest enemy. Keep us focusing on the past not the current position.

According to one Stanford's study in 2005 it proved one very impressive thing. Scientists gave a group of participants $20 each. They were then made an offer: You can flip a coin up to 20 times. If you lose the coin toss, you owe $1. If you win, you get $2.50. Everyone in this situation should make as many tosses as possible, since there's a 50/50 chance of accurately guessing a coin toss, and the reward for winning is far larger than the penalty of losing. But the researchers found only one group of participants willing to make large numbers of tosses: Those with a lesion in the area of their brains that controls emotion. Participants with normal brains threw in the towel after flipping a few losses in a row. People don't like losing money, and even if you know the odds are in your favor, a couple losses will turn you off. But those whose brains suppressed emotions kept on betting, regardless of past losses. Not surprising, given the odds and payoffs of the coin-toss game, they ended up with more money.

We're as human beings more likely to remember negative, emotional events than ordinary or positive ones, especially in the short run. So our memory is one of the most frightening things in trading.

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The BFM Assets Team.