Day Trading 101: The Recency Effect

A day trader 101 skill that is, without doubt, required for success as a trader is the ability to manage your emotions. The first step in mastering your emotions is the need to understand how your mind works and why human psychology can be so tricky within our world as traders. The topic of psychology and emotions apply to ALL day traders. The human mind is a bizarre place and when you’re not aware of all the mind games that occur, you will find yourself in the world of confusion and anger. In fact, even someone like myself who is well aware of these mind games still gets tricked from time to time. One of the most common mind tricks our brain plays on us is known as The Recency Effect. This “brain wiring” is actually very helpful in many areas of life and makes perfect sense on why our brains are wired this way. Unfortunately, when you transition into the arena of trading, what was helpful becomes a massive annoyance and potential cause of failure in creating consistent trading profits. Let me walk you through how this works and show you an actual real life example of The Recency Effect that happened to me.