MASS CONSCIOUSNESS. STEREOTYPES OF TRADERS 'BEHAVIOR.
STEREOTYPE №1. MORE QUANTITY OF TRANSACTIONS OPENS AGAINST CURRENT TRENDS
In simple terms, these are the deals open against the trend, in order to catch the price reversal at its very beginning.
There are many methods for determining the direction of the trend and its reversal, but the facts are a stubborn thing. They show that a prolonged price movement in one direction leads to an increase in the number of people willing to open a deal against its movement. They do not believe that the price can continue, for example, growth, because "it has already grown very much, where much more."
If you express this in figures, then in the direction of the current trend, only 40% of deals are opened, but against the trend - as much as 60%. This stereotype is based on the desire to "catch" a reversal at the very beginning - on the overcoming of some level or line of the figure of technical analysis.
STEREOTYPE №2. PROFITABLE TRANSACTIONS "LIVE" TWICE TIME LESS THAN DAMAGE
The reason for this stereotype is ordinary human fear. We are just afraid. We are afraid to miss the profit, so we are happy to close profitable trades. And we are afraid to take a loss on deposit, so we pull with the closure of such transactions, in the hope that the price will unfold.
It is curious that such behavior of traders leads to the fact that unprofitable transactions in the market are always more than profitable. And that is why the ratio of profitable traders to Forex to unprofitable traders is about 30-35% and very rarely exceeds 40%.
STEREOTYPE №3. CLASSICAL METHODS OF STOP INSTALLATION
Now the foreign exchange market is already far from the one that was before - the marketplace is ruled by market makers. And such classic levels, on which the crowd installs stop-loss, attract them, like sweet tooth cake, to open their deals.
The market has changed, but the habit of exposing stops for local extremes has remained. In fact, at such levels, there are twice as many Stop Loss orders as on all others.
STEREOTYPE №4. TAKE-PROFIT MAKES MOST TRADERS
Profit is loved by everyone, so the take-profit warrant is exhibited much more often. In fact, it looks like this:
40% of transactions have a stop-loss, of which 30% also have an established take-profit;
In 80% of the transactions there is a take-profit, of which 30% also have a stop-loss;
10% of transactions have no orders at all.
And why do we need this information, you ask? And then, that the next stereotype follows from it.
STEREOTYPE №5. INSTALLATION OF THE TEAK PROFIT IS NOT APPROACHED TO ANY LEVELS
The technique for setting the take-profit order is much larger than the stop-loss setting techniques. Therefore, such a cluster of take-profits, as it happens with stops, is not observed.
STEREOTYPE №6. MOST TRANSACTIONS ARE OPENED IN THE ABSENCE OF TRADING SIGNALS
If you track the congestion of transactions at individual levels, it becomes immediately obvious that the longer the price is at a certain level, the more open positions on it.
What does it say? And this means that the deals were opened without any obvious trading signals. That is, the crowd simply opens a deal, because they so wanted. And the reason to "see" the trading signal, you can always find.
STEREOTYPE №7. AVERAGE. ON ONE OPEN POSITION, THREE PENDING ORDERS
According to the results of the conducted research, the number of pending orders, on average, is three times more than the number of open transactions.
This is quite logical, because one transaction can have two pending orders: stop-loss and take-profit. However, the set stop and take is a ratio of no more than 1 to 2, and we have a ratio of 1 to 3. The rest of the pending orders are orders Limit and Stop.
Also, if we take into account the previous stereotypes and the fact that not all the deals have a stop loss and take profit, we will get the following ratio of pending orders in the market:
Stop-loss - 14%;
Orders of Stop type - 20%;
Take-profit - 28%;
Orders of the Limit type are 40%.