How to trade better using psychology?

In forex trading, psychology plays a very meaningful role, because investors have different perceptions about market behavior and information. Understanding those influences can help you to achieve better performance.

In 2002, Daniel Kahneman and Vernon Smith won the Nobel Prize in Economics because of their contribution to bring psychology and economics together.

They recognized the importance of the psychological aspects of human nature in forex trading. Their interest is in the decision-making process, especially how traders make decisions in the presence of uncertainties.

The forex trader psychology and the economic behavior

Using concepts from psychology, we can understand why we feel worse when we lose a winning opportunity than when we lose money in a bad forex trading position.

The emotional response is usually because of the expectation we create about the future. Forex trading is mostly about expectations and collective behavior.

The circulation of marketing content in the media and on the internet can also affect us. We see successful people saying how to make money, and how to become a millionaire.

This stimulates your willingness to purchase products from companies, and may influence your ability to perceive risk.

Wiseinvest uses very conservative language when it comes to making money and taking risk, because we aim to present all the relevant aspects for your forex education.

Mass psychology and forex herd behavior

We often behave according to the situation. This happens especially when we are facing uncertainties. In these situations, we use information about how other investors made their choices, in order to make ours. This is called herd behavior.

In 2002, the British television documentary The Century of the Self was released. The film was by filmmaker Adam Curtis who focused on the work of psychoanalysts Sigmund Freud and Anna Freud, and public relations consultant Edward Bernays (Freud’s nephew).

In episode one, Curtis says, “This series is about how those in power used Freud’s theories to try to control the dangerous crowd in an era of mass democracy.”

What he highlights is seen every day in the forex market, those with the greatest influence trying to lead the market. It is not easy to achieve, and regulators try very hard to limit this type of behavior especially if it can become abusive. We will talk about these influencers here below.

An example called decoy effect

With small changes to the set of options or information about a decision, we can get people to choose what we want.

There is a very good example for understanding the psychology underlying our economic decisions.

It involves selecting the satisfactory size of the popcorn at the cinema. You can watch it here, on a TV show called Brain Games.

Basically, in the first scenario, there are only two options, a small package and a large package. As they clearly differ, and prices are significantly apart, most participants chose the small one.

In the second part of the experiment, a medium-sized pacakage is introduced, with its price closer to the large package.

As people see this, with a small increase in money compared to the price of medium-sized popcorn, they can afford the big package. After this change, most people chose the big package.

This is very interesting, because nobody chose the medium size popcorn, but since they have more options and therefore a more complex decision, they were manipulated to choose the bigger pack of popcorn.

It is the same in the forex market; some orders exist to induce the herd in a specific direction. The information on the websites of forex brokers and educational portals generally has a component to encourage people to take more risks than normal.

Artificial Intelligence goes beyond individual psychology

One of the strongest points of artificial intelligence is that it is more difficult to manipulate with psychological maneuvers. They rely on statistical data from a huge database, far beyond human computational capacity.

I do not mean that it is impossible to deceive an application built with artificial intelligence. I mean, it is more difficult because it requires more resources and more intelligence to do so. Probably someone who has these skills will use it to make money directly in the forex market and will not need to manipulate ordinary people.

Wiseinvest develops its AI forex system to properly manage the risk of each position. We consider the size of your investment and your risk profile to make your suggestions. It can minimize the risk of abnormal market behavior.

The best way to trade forex

There are two ways to invest with our AI in forex:

1. Automated with AI-Trading. Check out the 3 steps to trade automated with our AI.

automated trading with ai bot

Don’t you have a broker account yet? Our AI is integrated to trade automated with the broker Oanda. Click here to open an account.

With Automated AI trading you do not need MT4 / MT5 and other trading platforms to invest in forex. All forex trades are automatically placed into your broker account and you can monitor the AI trading performance directly on our dashboard.

2. Manually with AI forex signals.

Wiseinvest also provides AI forex signals that perfectly fit into MT4, MT5 and any trading platform. To trade with our AI forex signals, you must simply copy the data you receive from each real-time signal into any forex brokerage account of your choice.

There are five unique variables for each AI signal, and each must be copied exactly, in order to match the performance of the signal as close as possible.

Each AI forex signal alert consists of the following five data points:

  • Symbol (forex pair)
  • Direction (long or short)
  • Position size (number of units or lots)
  • Take profit (price level to exit with maximum gain)
  • Stop loss (price level to exit with maximum loss)

You can trade forex with our free forex signals clicking here, or with our Premium subscription that provides you unlimited AI signals and automated AI trading in partner brokers. Whether you are a beginner or a Professional forex trader, our AI trading system can help you save time and improve your trading performance. Get started with free AI.

  1. Subscribe to a Wise-Plan.
  2. Open a Brokerage account. Check this article about the best forex Brokers.
  3. Set an amount and a position size on your Wiseinvest dashboard.
  4. Copy the signals that we will send to you via email and paste you’re your Brokerage account.

The forex signals are sent every time that our trading system powered by Artificial Intelligence (AI forex system) identifies a new trading opportunity.

When investing through Wiseinvest automated AI trading or AI forex signals, you do not need to calculate or change the leverage in your forex broker account. Learn more about leverage in forex trading clicking here.

Education is the safest way to invest

We know that more educated investors tend to outperform others. Therefore, we form a professional team to produce our content. You will receive solid educational content to complement your Wiseinvest AI forex trading system.


  • In forex market as in other economic aspects of our life, psychology matters.
  • Investors tend to adopt the decision of the crowd when it faces the uncertainty and makes its own decision.
  • Those who understand the psychology of the market can perform better than those who don’t.
  • Educational content is the best investment to improve your results and Wiseinvest has a very wide selection.

Artificial Intelligence (AI) can improve your forex returns because it monitors better and more complex behavior. When the number of agents is very large, the AI can collect the information needed to anticipate changes in the market. Humans are not able to do the same without AI.

Disclaimer: Forex and Contracts for Difference (CFDs) are complex instruments and come with a high risk of losing money due to leverage. Forex trading is not suitable for everyone. You should consider whether you understand how forex and CFDs work and whether you can afford to take the high risk of losing your money.

The forex brokerages displayed shall disclaim the overall performance of traders in their platforms. Oanda warns that 76.8% of retail forex traders lose money trading CFDs. XTB warns that 80% of retail forex traders lose money trading CFDs. The forex broker Fxcm warns that 69.66% of retail forex traders lose money trading CFDs.

The performances aforementioned are not related to Wiseinvest AI forex trading and AI forex signals system. You can check the performance of our AI forex system on our dashboard.