On the Internet there are descriptions of hundreds of different strategies, the essence of which is to overlay indicators (were more, where less) on the chart and look for the simultaneous coincidence of several conditions, called a signal. How does a technical analysis trader trade? He imposes indicators, seeks confirmation, finds the successful coincidence of factors and opens a deal. True? But what happens to consciousness when it constantly searches for these same coincidences? The more often you check the schedule, the more the brain tries to search, giving out wishful thinking. And sometimes the search for a signal turns into a kind of mania, after which the brain finds on the chart even something that could not be in principle.
An interesting experiment was conducted in one city. Due to the high crime rate, volunteer teams were formed to report crimes to the police. At first, the result exceeded all expectations. But when the crime rate decreased, volunteers began to report on all sorts of little things: crossed the road in the wrong place, threw a cigarette butt past the ballot box, etc. As a result, the police were overloaded with stupid violations, distracted from more important tasks, and the volunteers themselves were carried away by all sorts of little things instead of the main work.
Another interesting experiment was conducted in a group of people. They were asked to find among the proposed expressions of human faces those on which the threat is displayed. At first, the participants in the experiment showed in those pictures where the threat really took place. But then the experimenters began to seize these pictures, of course, without warning the participants in the experiment. And people began to see the threat in those pictures that expressed ordinary emotions. Why? Because they were told to find, and the brain began to look for a threat in the pictures even where it really wasn’t.
There is a similar problem when opening a transaction in the Forex market. First, the eyes quickly grasp the exact signal – the deal is successful. Then the brain begins to look closely at the schedule each time more carefully. Then the signal appeared again, and now it appeared. We impose one indicator – there is a signal confirmation. We impose the second – there is confirmation. We impose the third – it shows everything exactly the opposite. The trader falls into the trap of his desire to see the signal and finds confirmation where he is not.
Important! Studies show that the human brain works according to the following algorithm: the less the familiar combination of signals comes across, the more often the brain begins to notice it. And vice versa. The more often he sees a familiar event, the more it becomes boring – and the brain begins to think out what is not, paying attention to the little things and ignoring the real signals.
If you open a chart, and after a little correction of the timeframe or history, you immediately see a signal, then you can open a deal in the Forex market. When a person’s search for signals is automatic, he sees a combination of indicators almost instantly on any chart. If you need to spend time searching and confirming, the probability of an error increases.
What do we have to do:
- to make automatic the search for signals on a demo account;
- clearly set goals and not try to think out something superfluous. There is doubt – skip the signal;
- strictly adhere to the trading plan.
Traders recommend checking the chart with a frequency corresponding to the timeframe. If the timeframe is set, then look at the chart with a frequency of no more than two times per hour. Exact signals for opening a transaction in the Forex market are visible in the first seconds. The more you try to find them, the more likely it is to lose.