Retail traders psychology and the market

It’s anyone know exactly why the market goes against what retail traders think, is the market manipulated? Are they putting baits on retailers ? Does any one know the answer. If most of the people think in one direction doesn’t the market need to go to that direction !:smiley:

Market goes in the direction the money goes. Retail traders simply don’t have enough money (even all together) to move the market.

The second problem is that most retail traders are usually in the trade either too early (always picking tops and bottoms - so you don’t really need an explenation why they’re always wrong) either too late ( jumping in a trade that has already ended - for example when EUR/USD hit 1.0500.


Retail traders won’t give any effect to the market’s movement so retail traders must capable to follow the tendency of market’s movement in order to gain profit from forex market. So, retail traders must prepare theirself with any movement in the market and it means good money management. Retail traders won’t be easy to be successful in forex trading but it is possible when traders had good trading plan to follow and discipline to stick on the system.


Prices do not move against any one person or against any particular group. There are retail traders that are winning and others that are losing. There are institutional hedgers that are taking money out of the interbank market and others that are putting money in. Prices are not fixed or manipulated by insiders fleecing the average Joe out there and they cannot be.

There is no retail trader psychology. Retail traders are a diverse number of individuals and each of them has his own psychology. For any given market at any given moment there are retail traders that are long, others that are short, and others that are flat. Every one of them got to that position for different reasons at different times at different prices.

There is a market phenomenon called “reflexivity”. It was written about by George Soros in some of his more famous books. It is the condition of a large market-wide bias that moves prices in a given direction. It can be described as “most of the people think in one direction” and thus prices move in a given direction. But the “people” in that description cannot be described as “retail traders” or “institutional traders” or “pros” or whatever. They are a diverse group.



This is one of the things new traders don’t get.

If most people believe the market is going in one direction, then they probably have positioned themselves in that direction. Prices move because of order activity, or the lack thereof. If everyone’s already in the market, who’s left to enter orders to keep the market moving in that direction?

This is a theoretical idea, of course. You are never going to get everyone in the market all agreeing and acting as once in the same time frame. I think you can see the idea, though.

We can’t deny that market’s direction is not only same all the time but there is time that condition will become trending (bullish or bearish) and there is sideways condition too. But if you could predict the market’s movement so you can take advantage on market’s movement. Usually, strong trending will happen after sideways which has happened for long-time so you can make preparation in your technical and psychological after you looked on market’s movement.

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I am a retail trader, thus i can understand the extent to which we think. Most of the time the money what we have is insufficient to even hold the trades in the market and moreover increased or high expectation out of the small money what we have and greediness to become rich makes us lose more and more money.

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Yes and if the trader is able to avoid making losses and realize their mistakes made then certainly they can drive their negatives into the positives and flourish in the forex trading business undoubtedly.

Yeah, I guess the most difficult part is just to be able to stick to a pre-set trading plan.

Also, I’m wondering if the point of the optimal trading mindset includes getting rid of the emotions, why are robots not already better than humans at trading?

All of us think optimally as we less plan for risk but think more about profits . Greediness can not bring profits it is just possible with their right trading decisions. not see to any other options for earning as robots or shortcuts or hiring non trusted traders . Simple psychology is to think for a normal business having high risks that will give just low % of safe profits.

Yeah but that’s not so appealing. Scammers can “succeed” with aspiring traders because the promise of profits is more important to people than anything else. Also, it’s not in the interest of any brokerages to reveal how little part of all traders makes actual profit.

There is no correlation between the retail traders and market movements. Market is changing according to the changes in the world economy, significant momentum around the world. It is not that retail traders are the only sufferer. To ensure success, it it is the responsibility of retail trader to carry out market analysis.

Why is it then that IG Index (among many others I have no doubt) - USE the open positions of their own retail customers as a reverse indicator of market sentiment ?

I don’t really understand why retail traders’ psychology should be applied here and actually what makes it different from market here. I would say that there is a market which is created by a lot of influencers, and if you want to be successful you to adjust yourself to it.

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Retail Traders are more about making quick money for the day. The movement of the market is heavily dependent upon what happened and what is going to happen and retail traders don’t have that kind of influence or money .

I think that the market still depends more on big players who do what will be more profitable for them at one time or another.

The movement in the market to me is a function of demand and supply and not any manipulation.

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“Is the market manipulated”?
ABSOLUTELY IT IS and many large banks have been fined for doing exactly that!

If you want some advice that could transform your trading, it would be, AVOID THE DOLLAR PAIRS! :wink: