Mental Accounting in Forex Trading

‘Mental Accounting.’ This is a concept that many traders employ, often without realizing it, and it can significantly impact our decision-making processes.

“But first, what exactly is Mental Accounting? In simple terms, it’s a psychological phenomenon where traders mentally segregate their trading accounts or profits, treating them differently based on their origin. More commonly, traders might take risks with their gains that they would never consider with their original capital.”

“Picture this: you’ve made some impressive gains in the Forex market. It’s easy to view those profits differently from your initial investment – almost as if they’re ‘extra’ or ‘bonus’ money.

Treat every dollar in your trading account with the same level of respect, regardless of its origin. This disciplined approach helps you avoid undue risks and preserves your capital effectively. #forex #uk #backtesting #eatrading #gold #indicators #london #dance #lifestyle

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