Came across this article, the research is based on stocks, but still interesting and relevant to Forex.
Excerpt.
When minds think alike great things can happen, even if the minds themselves are not so great. Stock day traders who act in sync — no matter the stock, or whether they are buying or selling — make more money at the end of the day than their out-of-sync peers, reports an analysis to appear in the Proceedings of the National Academy of Sciences.
It is coming at it from a scientific perspective, rather than a straight trading perspective, the author will not have been a specialist and will have had a pretty savage word limit, so I am just glad to see trading mentioned in a positive light for once.
And noone cares about the losing herd, they just care about getting into the winning herd…!
There need not be a losing herd. Depends on the market. For example, in a straight asset market like stocks there’s mostly not a short on the other side of a long position, so nobody’s losing if the market is trending higher.
I agree with you, I just think that we will most of us skip over thoughts of the losing herd and think about ourselves being in the winning herd. Positive visualization and all that!
You definitely want to follow the ‘momentum of the herd’ aka the trend. But you also want to make sure you get in at better prices than the rest of herd. You also want to know when the momentum of the herd is stalling out so you can take profits at better locations that the rest of the herd that thinks price will continue going wherever it is going forever.