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The Human Mind vs. Computers in Forex Trading
There are numerous Forex trading softwares out there but when it comes to effective analysis andtrading, the human mind triumphs.
Price action reflects the aggregate belief structure of all market participants
Free markets are created by the beliefs that human beings hold and act on about whether theprice of a particular security is too high, too low, or just right. Markets are a reflection of human emotion and price action is a picture created by it. Markets can change very quickly, just like human moods and emotions. It is counter-intuitive to suggest that a computer tradingprogram could do a better job analyzing and trading a market than a skilled human mind.Relying on a mechanical trading program to effectively predict the outcome of something thatis almost purely emotional seems a bit silly since computers are anything but emotionalalthough the programs do indeed some advantages over the human mind, mainly in tradingpsychology.
Computers are not emotional
Computer trading programs lack the ability to commit emotional trading problems that plague
aspiring Forex traders. Being emotionless, a Forex “robot” trading program is only going to
operate according to how it is programmed. We can learn from the computers aboutmanaging our emotions when trading the markets. We can learn that we should not react tothe market based on what happened in a previous trade, we should only react to the marketbased on what it is currently doing and whether or not our trading edge is present. There is noneed to use Forex trading robots as long as we use our ability to interpret emotion and
develop “gut” trading instinct to our advantage, and not let this ability to work against us by
giving into the emotion that result from winning or losing trades.Emotional trading mistakes are the main reason why most traders fail to make moneyconsistently in the markets and the elimination of emotional trading mistakes is the biggestadvantage computers have over the human mind in the market. As far as analyzing and pickingentries, the human mind is far superior than computers.
Developing your discretionary Forex trading sense is important
Markets do form similar signals that are somewhat repetitive over time but the decision to pullthe trigger on a trade is a lot more than what a computer program can calculate. A large partof Forex trading success is gut-feel which is really something that traders need to develop. Wecan develop our discretionary trading instinct built on the foundation of price action, its
discretionary price action trading, meaning you don’
t take every single price action signal thatforms. Instead, you learn to trade these price action setups according to market conditions and