One of the most important things at trading forex is the psychological trait of which not many participants of this process are aware of. In a previously released educational material, Jarred Davis, one of the most successful forex specialists in the world talks about how it is important for future traders to comply with the most mattering features of this market. The so called recency bias is one of such concepts that bring forth the trading evolution and allow for the next steps to follow after. This particular examples is also known as anchoring, which particularly involves the psychological part of trading as previously stated. It is a state in which the brain accepts any emotional signals in the present, that also lingers into the past at some point or another.

forex recency bias

Many of the active members of the trading community have probably felt that already, for example after several winning streaks on the trading market that leads to singular call without any hesitation that is. The triggering event is overwhelming and many will feel that rush of confidence after winning many of the previous activities that have proven victorious. On the other hand, if the last trading events would be constant failures, the fear of upcoming loss would prevent you from taking on the challenge and participating all along. One’s conviction would be already shaken and no matter how many of those past trades were wins or loses, it would not matter as your decision would been already made. As human brains are programmed to focus on the recently experienced past, the bias would stop them from undertaking such decisions in the first place. An issue as it is, the recency bias may prevent the traders from taking on with their progress and block any further confidence at taking risk whenever the occasion allows for it.

The best way to overcome this is by having a tracked record of all your personal performance, this way displaying the consistence and keeping you aware of how good your own process has been up to date. You cannot let the bias take hold on to you and destroy the whole progress that you have achieved over the course of time. There are plenty of online tools to help you analyze the activity at source, but you can also use a simple spreadsheet or paper to take notes and derive consequences from the past state.