Features of “Crowd” behavior on Forex market

It’s not hard to understand the psychology of online trading, because it is based on simple human qualities. Our instincts tell us that it is safer to be among the majority, that’s why emotional traders stay in groups and act in the same way. The main trend can be considered as one of the elements of crowd psychology. When the price is moving in one direction many participants follow this tendency.
However, realities on Forex are greatly differ from the other world. In the world of online trading it’s danger to follow the crowd because that will lead to losses. Because few can earn on speculations and millions of traders lose.
In most tutorials for beginner traders you will read that you should follow the trend. It is right only in some extent. Analysts of HQBroker.com recommend to follow specific rules of money management in order to avoid losses and limit risks.
Crowd behavior is formed due to two powerful stimuli:
1. Greed. Desire to earn maximum profit on open positions is fully logical. This desire has every investor. However, greed can capture trader’s thoughts completely and he won’t be able to see clearly the whole situation on the market. Emotions are the main enemy of trader. Emotions decrease efficiency of work. To withstand emotions trader need to stick to his trading strategy. You should make important decisions only when you calm and cold-minded. If you feel excessive excitement or anxiety you better open deal later.
2. Looking for a leader. Novice trader would better copy deals of more experienced trader rather than create his own strategy. It might seem good idea at first but in fact it leads to huge losses. When trader tries to copy deals of other player he deprived of the opportunity to learn from his own mistakes and can’t predict future dangers. Even if it’s easy at first, trader cannot rely on behavior of the crowd because market makers will earn and small traders will lose.
Following against the crowd – hard and risky strategy, but some market participant able to make good profit on it. It requires attention and knowledge. At first you’ll need assistance of professionals, that is why we recommend you to open account with HQ Broker, and get full guidance into the world of online trading. Trader who will learn this tactic will control the situation and make profit in hard market periods.