How the illusions - unrealistic expectations lead to losses?
In trading, traders always have expectations or mental images of how the price will move. The greater their confidence, the larger the position size they might take, which can lead to potentially heavier losses.
This is because actual price movements often differ from expectations, making most expectations illusions.
Here's a common chart example: A nice breakout can create the illusion of a big, immediate price increase (pump). However, if the price doesn't move as expected, a heavy retracement can trigger a stop-loss order, resulting in a significant loss.
The stronger the fear of missing out (FOMO), the more likely traders are to fall victim to these illusions.
This is because actual price movements often differ from expectations, making most expectations illusions.
Here's a common chart example: A nice breakout can create the illusion of a big, immediate price increase (pump). However, if the price doesn't move as expected, a heavy retracement can trigger a stop-loss order, resulting in a significant loss.
The stronger the fear of missing out (FOMO), the more likely traders are to fall victim to these illusions.
Message the author for a trial of the indicators.
A Trading Indicator Artisan and JAVA Programmer, dedicated to enhancing traders' productivity.
A Trading Indicator Artisan and JAVA Programmer, dedicated to enhancing traders' productivity.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.