Trader Psychology: Which Is More Likely to Reverse - EURUSD or USDCHF?
• There are many 'cognitive biases' that skew our interpretations of the markets and trading
• One simple tendency is a statistical valuation skew when an FX pair is rising versus falling
Sign up for a free trial of DailyFX-Plus to have access to Trading Q&A's, educational webinars, updated speculative positioning measures, trading signals and much more!
There is a laundry list of 'cognitive biases' that can warp trader psychology and behavior. These fallacies arise from emotion, social behaviors and even human nature; but they are generally a detriment to our trading. One very simple tendency that many traders to have is assigning a different valuation of trend potential (reversal versus continuation) depending on the direction the market is taking: bullish versus bearish. While this may be a practical association in a market like equities, it doesn't carry over to FX. We look at an example of this bias using the EURUSD and USDCHF in today's Strategy Video.
Sign up for John’s email distribution list, here.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.