Mastering Forex Trading Thinking: Strategies for Achieving Success

image of a smart guy's head, relating to forex trading thinking mindset

Forex, like any other form of market speculation, requires a unique blend of analytical and creative trading thinking. Successful traders understand that simply crunching numbers and analyzing charts isn’t enough to make profitable trades. They must also be able to think creatively and adapt to changing market conditions.

However, forex trading is also a high-risk and high-reward activity that demands a rational and disciplined approach to the market. To succeed, traders must strike a balance between their analytical and creative Forex trading thinking, constantly analyzing data while also remaining flexible and open to new possibilities.

This is where the concept of left-brain and right-brain forex trading thinking comes into play.

The concept of left-brain and right-brain thinking was first introduced by Roger W. Sperry, who won a Nobel Prize for his research in the 1970s. He suggested that the two hemispheres of the brain are responsible for different types of thinking.

In his words, each hemisphere is:

“… both the left and the right hemisphere may be conscious simultaneously in different, even in mutually conflicting, mental experiences that run along in parallel.”

— Roger Wolcott Sperry, 1974

image of Roger Sperry with the quote, relating to forex trading thinking

The left brain is associated with analytical thinking, logic, and rationality, while the right brain is associated with creative thinking, intuition, and emotion.

The idea of left-brain and right-brain dominance has been popular in the past, however, recent studies have shown that the brain is much more complex than this simplified view and that both hemispheres work together in most cognitive tasks, including trading.

By cultivating a balanced approach to Forex trading thinking, traders can leverage both sides of the brain to make informed and intuitive trading decisions.

Learn how to harness the power of both hemispheres of your brain to become a more successful Forex trader.


Left-Brain Forex Trading

image of a left-brain forex trader describing the forex trading thinking style

One approach that has gained popularity in recent years is left-brain trading. Left-brain traders are analytical, logical, and data-driven.

They rely heavily on technical analysis to make trading decisions. Technical analysis involves studying price charts and identifying patterns that can be used to predict future price movements.

One of the biggest advantages of left-brain trading is its simplicity. Traders can use well-established trading strategies and techniques to make informed decisions, based on pure price-action, and using just charts.

There is a wealth of information available on technical analysis and trading indicators, making it relatively easy to learn and apply. This approach provides a clear and structured framework that helps traders to avoid emotional decisions, which can be a major pitfall for traders who rely on their intuition or gut feeling.

Left-brain traders also tend to be good at risk management. They set clear trading goals, establish stop-loss levels to limit their losses and use position sizing to manage their risk. This approach helps them to minimize their losses and maximize their profits.

However, one of the limitations of left-brain trading is that it can sometimes overlook market trends and changes that cannot be easily quantified. Simply because the Forex market is dynamic and always forward-looking.

There are many factors that can influence price movements, such as political events, economic data releases, and changes in sentiment. Left-brain traders may miss out on these opportunities if they rely solely on technical analysis and ignore other factors.

Despite these limitations, many successful traders have used left-brain trading to achieve success in the Forex market. One of the most well-known left-brain speculators is, no other than, Warren Buffett, who is famous for his value investing approach. Buffett uses fundamental analysis to identify undervalued companies and invests in them for the long term. He has been highly successful, with a net worth of over $100 billion.

Another famous left-brain trader is George Soros, who is known for his macroeconomic approach to trading. Soros uses a top-down approach to identify trends in the global economy and invests in currencies that he believes will benefit from these trends. He famously made a billion dollars by shorting the British pound in 1992.

In summary, left-brain trading is a market approach that emphasizes data, analysis, and logic. It is relatively easy to learn and apply, and it provides a clear and structured approach to trading.

However, it can sometimes overlook market trends and changes that cannot be easily quantified. Successful left-brain traders, such as Warren Buffett and George Soros, have achieved great success in the markets by using this approach.


Right-Brain Forex Trading

image of the male person that relates to forex trading thinking approach in the markets

While left-brain thinking is often associated with success in trading, there is also a place for right-brain thinking in the Forex market.

Right-brain traders rely on trading intuition, creativity, and emotion to make speculative decisions. They have a more flexible and adaptable approach to trading, and they are excellent at identifying market trends and changes that cannot be easily quantified.

Rather than relying solely on technical analysis, right-brain traders use their trading instincts and creativity to find opportunities that may not be evident from a purely analytical perspective.

Right-brain traders can use their intuition and creativity to identify emerging trends, spot market inefficiencies, and take advantage of market volatility. This approach can be particularly useful in volatile markets, where market conditions can change rapidly, and traders need to be able to adapt quickly.

However, right-brain trading can also be risky as it can lead to impulsive and emotional decisions.

Right-brain traders may be more prone to taking on excessive risk, chasing after losses, or making decisions based on emotions rather than logic. They may also struggle with risk management, as their intuitive approach may not always align with risk management principles.

Despite these risks, many successful traders have used right-brain thinking to achieve success in the markets.

One of the most well-known right-brain traders is Jesse Livermore, who relied on his gut instincts and intuition to make trades. Livermore was a pioneer in the field of technical analysis, but he also used his intuition to make decisions.

He famously made millions of dollars in the stock market in the early 1900s, but he also suffered significant losses due to his impulsive and emotional decisions.

Another successful right-brain trader is Paul Tudor Jones, who combines technical analysis with intuition and creativity to develop his trading strategies. Jones is known for his ability to identify market trends before they become evident to others.

He uses his intuition to identify emerging trends and his creativity to develop trading strategies that take advantage of these trends. He is also known for his risk management skills, which allow him to manage risk effectively while still taking advantage of market opportunities.

To summarize, right-brain Forex trading is an approach that emphasizes intuition, creativity, and emotion. It can uncover opportunities that may not be evident from a purely analytical perspective, but it can also be risky due to the potential for impulsive and emotional decisions.

Successful right-brain traders have achieved great success in the markets by combining their intuitive approach with risk management principles and a strong understanding of market dynamics.

The 3d Amazon book written by Dave Matias.

Traders might have various questions when addressing the topic of forex trading thinking to determine if they are left-brain or right-brain traders.

Some potential questions could include:

Are there any online tests to find out if I am a Left-brain or a Right-brain forex trader?

Unfortunately, there are no definitive online tests that can determine whether you are a left-brain or a right-brain forex trader. However, you can take some general tests to assess your cognitive preferences and learning styles.

Here are a few examples:


  1. Myers-Briggs: Type Indicator (MBTI): This is a personality test that assesses your psychological preferences in how you perceive the world and make decisions. Knowing your personality type can help you understand how you approach trading, what motivates you, and how you interact with others in the trading environment.


  1. DiSC Assessment: This is a behavioral assessment tool that measures your dominant behavioral traits in four areas: dominance, influence, steadiness, and conscientiousness. Understanding your behavioral style can help you identify your strengths and weaknesses as a trader and work on improving your performance.


  1. Trading Style Assessment: This type of assessment is specifically designed for traders and measures your trading style preferences, such as risk tolerance, trading frequency, time horizon, and market focus. Knowing your trading style can help you tailor your trading strategy and make better-informed decisions.


  1. Emotional Intelligence: (EI) Test: EI refers to your ability to recognize and manage your emotions and the emotions of others. High EI is linked to better decision-making and performance in trading. An EI test can help you identify areas where you can improve your emotional awareness and regulation.


It’s important to note that while these tests can give you some insight into your cognitive preferences, they are not definitive or absolute. Forex trading requires a combination of both analytical and creative thinking, and successful traders often use both sides of their brains in their decision-making process.


How do left-brain and right-brain traders approach risk management, decision-making, and other important aspects of trading differently?

Left-brain and right-brain traders may approach risk management, decision-making, and other important aspects of trading differently based on their cognitive preferences:

Risk management

Left-brain traders may be more focused on quantitative analysis and may rely on technical indicators and mathematical models to assess risk and determine entry and exit points. Right-brain traders may be more intuitive and may rely on gut instincts and market sentiment to manage risk.


Left-brain traders may be more analytical and methodical in their decision-making process, while right-brain traders may be more creative in their market approach and intuitive. Left-brain traders may rely on data analysis and logical reasoning to make decisions, while right-brain traders may be more inclined to use their speculative instincts and discretionary trading abilities.

Market analysis

Left-brain traders may be more inclined to use technical analysis, and quantitative models to evaluate market trends and patterns, while right-brain traders may be more interested in using fundamental analysis, geopolitics, global macro, and other qualitative factors to assess market conditions.

Trading psychology

Left-brain traders may be more disciplined and systematic in their approach to trading psychology, using techniques such as goal-setting and discipline to stay focused and motivated. Right-brain traders may be more attuned to their emotions and may use techniques such as mindfulness, visualization, and meditation to stay centered and manage stress.

It’s important to note that these are generalizations, and individual traders may exhibit a combination of both, left-brain and right-brain tendencies. Successful traders are those who are able to integrate both analytical and intuitive thinking in their decision-making process and adapt to changing market conditions.

Regardless of cognitive style, effective risk management, decision-making, market analysis, and trading psychology are all essential components of successful trading.


Can understanding whether I am a left-brain or right-brain trader help me improve my overall trading performance, and if so, how?

While the notion of left-brain or right-brain dominance has been largely debunked, there is some evidence to suggest that different cognitive styles may affect how traders approach trading and make decisions.

However, it’s important to note that there is no one-size-fits-all approach to trading, and as mentioned before, the most successful traders are those who are able to integrate both analytical and intuitive forex trading thinking in their decision-making process.

That being said, understanding your cognitive style can help you identify your strengths and weaknesses as a trader and develop a trading style that aligns with your natural tendencies.

For example, if you tend to be more analytical and quantitative in your forex trading thinking, you may excel at developing and testing trading models and algorithms.

On the other hand, if you tend to be more intuitive and creative, you may be better at identifying market shifts and developing discretionary trading strategies.

To improve your overall trading performance, it’s important to focus on developing a well-rounded set of skills that includes both analytical and intuitive thinking, as well as risk management, trading psychology, and market analysis. Some strategies that may be particularly helpful for left-brain or right-brain traders include:

  • Left-brain traders: Focus on developing your analytical and quantitative skills through technical analysis, creating trading models and algorithms, and monitoring market data. Consider using tools such as spreadsheets and data-driven software to help you analyze and interpret statistical information.


  • Right-brain traders: Focus on developing your intuition and creativity through activities such as brainstorming new speculative ideas, exploring alternative trading strategies, and experimenting with new approaches to trading, such as; “correlation,” or “volatility expansion” trades. Consider using tools such as forex heat-maps or forex sentiment to help you generate new ideas.

Ultimately, the key to improving your trading performance is to be adaptable and willing to learn. By understanding your cognitive style and developing a well-rounded set of skills, you can become a more effective and successful trader.


The 3d Amazon book written by Dave Matias.


Combining Left-Brain and Right-Brain Approaches

While both left-brain and right-brain thinking have their advantages and disadvantages, the best approach to Forex trading is to combine the two.

As discussed before, left-brain thinking provides structure and analytical thinking, while right-brain thinking offers flexibility, creativity, and intuition.

Therefore, the best approach to trading, in our opinion, is to combine left-brain and right-brain forex trading thinking. By using both analytical and intuitive thinking, traders can make more informed and profitable trading decisions.

To balance left-brain and right-brain thinking in the markets, traders should:

  • Develop a clear and structured trading plan based on analysis and logic.
  • Use technical indicators and charts to identify potential trading opportunities.
  • Pay attention to their intuition and emotions to make decisions based on market trends and changes.
  • Practice good risk management and be disciplined in executing the trading plan.

Here are some tips for combining left-brain and right-brain approaches to Forex trading:

Use Technical Analysis

Technical analysis is an important part of left-brain thinking. It involves the use of technical charts with indicators to analyze and identify potential trading opportunities. Traders who use technical analysis often use chart patterns, moving averages, and other technical indicators such as; market profile, order flow, and deltas, to help identify market conditions and their changes.

Incorporate Fundamental Analysis

Fundamental analysis is another important part of right-brain thinking. It involves the analysis of economic and financial data to identify potential trading opportunities. Traders who use fundamental analysis often look at economic indicators, such as CPI, Inflation, and Interest rates, to help identify potential market trends based on the Central Banks’ actions to various economic conditions.

Follow Market Trends

Market trends are an important part of both left-brain and right-brain thinking. Traders who follow market trends use both technical and fundamental analysis to identify potential market shifts. To be precise, fundamental analysis is being used for identifying emerging trends and taking advantage of market inefficiencies, while technical analysis, is for timing entries and exits.

Practice Patience

Patience is an important part of both left-brain and right-brain thinking. Traders who practice patience are more likely to make well-defined trading decisions. They take the time to analyze market trends from different perspectives before making solid decisions.

Manage Risk

Risk management is an important part of both left-brain and right-brain thinking. Traders who manage risk effectively are more likely to be successful in Forex trading. They use stop-loss orders, hedging techniques, and various risk management tools to help manage their overall market exposure.

Learn From Mistakes

Learning from mistakes is an important part of both left-brain and right-brain thinking. Traders who learn from their mistakes are more psychologically mature in their Forex trading. First, they document then, they analyze trading decisions and make adjustments to their trading strategies in a constructive manner.



In conclusion, Forex trading requires a balanced approach that incorporates both left-brain and right-brain thinking. Traders who rely solely on one approach risk missing out on potential opportunities or making emotional decisions that can lead to losses.

Left-brain Forex trading, with its reliance on data, analysis, and logic, is a structured and straightforward approach to trading. It is excellent for identifying patterns, interpreting technical indicators, and setting clear trading goals. However, it can be limiting as it may overlook certain market tendencies and changes that cannot be easily quantified.

On the other hand, right-brain Forex trading relies on speculative intuition, creativity, and emotional maturity. They can uncover opportunities that may not be evident from a purely analytical perspective, but it can also be risky as it can lead to overly impulsive and emotional decisions.

Combining both approaches allows traders to take advantage of the strengths of each and minimize their weaknesses. By using a balanced approach, traders can identify potential opportunities through technical analysis and also rely on their intuition to make informed and profitable trading decisions.

How To Beat Randomness In The Financial Markets?

Here is another great piece on Randomness In The Financial Markets.

David Paul, the veteran trader, explains it in a very casual way with some good examples, read on and enjoy…

“It’s always been my understanding that it’s quite difficult to make money, long-term, if you’re trading currencies, or Indices, but you make that work in a very short time frames. Is that correct?

Well, I look at the Forex market on Daily charts for the Trend and then, I look at 4-hour charts for entries. Yesterday, I looked at a 30-minute chart, because I had the time to focus on the 30-minute chart. I haven’t got that today…you’re trading technically alone in the Forex Market.

There’s a lot of news around, it drives prices one way, or the other way and your hit-rate suffers. I think using VectorVest on the stock market, good quality stocks, you can get your hit-rate up to 75 percent. On the Forex market that comes down, I don’t care who you are, it comes down significantly. If you speak to any Institutional trader, they’ll tell you that if your hit-rate comes down, then what happens is, you get into these ghastly clusters of good and bad luck.


To illustrate that:

– Do you ever go to the casino?”

– I do…

– Okay…If you play a Roulette?

– Yeah…

– Okay, all right. Well, roulette is red and black…so, If you look at the scoreboard down at the bottom of the roulette wheel – the electronic score book…if you look, you’re going to see long runs of Red and long runs of Black. It should be: red and black, red and black, red and black, but Life is not like that. You get clusters of good luck and clusters of bad luck.

image of a roulette wheel that explains the Randomness In The Financial Markets

Your mother may told you that bad things happen in threes…that’s because Life is mostly random.  In eight observations, you get a cluster of three. In other words – 1/2 times, 1/2 times, 1/2 …Okay. And your mother could only remember eight observations, so she says that things happen in threes. So, in a 50% system you should be right one out of two and, one out of two – you should be wrong…

– What’s the probability of two bad ones in a row?

Is, half times a half…Okay, – two bad ones in a row. That means in a 50% system, in every four trades you have two bad ones in a row and two good ones in a row. Now, that means, if your hit-rate comes down towards 50% and many Trend-following traders would “sell their granny” for a 50% system; most Trend-following systems are less than 50 percent. Meaning, in 4 trades you’re gonna have 2 bad ones in a row.

Now, most people will give up after 2 bad ones in a row, but it gets worse…

– What’s the probability of three bad ones?

A half, times a half, times a half…Okay, which means that you get a cluster of 3 bad ones in a row every 8 trades…You get a cluster of 4 bad ones in a row every 16 trades! And you’ve got a cluster of 5 bad ones in a row every 32 trades!

Five bad ones in a row…how good will you be in executing your system, with precision, after five losses in a row?!

three dices on a chess board representing the Randomness In The Financial Markets


That’s the challenge in the short-term market, as the hit-rate comes down, then these ghastly clusters of bad luck start, and of course, a cluster of good luck. You can have a cluster of good luck, as well.


Actually, cluster of good luck is even more detrimental to your health than a cluster of bad luck, because in a cluster of good luck you get a little thing between your ears, called a pituitary gland, and it pumps all sorts of muti-muti-zulu. It is Zulu medicine; it pumps all sorts of Muti into your bloodstream. When you leave the gym after a good workout, you feel good, yeah?! All right…When I leave the gym after a good workout, I feel, I’m 18 again, and similarly, when you have one good trade in a row, two good trades in a row; the old pituitary gland gets to work. And it pumps stuff into your bloodstream; you feel good, you become euphoric and when you become euphoric – the definition of euphoria is, Invincible.

a happy woman that thinks of a Randomness In The Financial Markets

You start to forget about all those position sizing. You say: “Let’s have a big bet.” When you have a run of good luck that euphoria takes over and most people, in fact, go bankrupt after a run of good luck, not after a run of bad luck. Because, they think they’re God, and they forget about all those position sizing stuff…it’s happened to me on a few occasions.

If you’re a risk manager; the risk managers in the City are, in fact, coached into assessing the susceptibility of their traders to Euphoria. That is a big problem, and anybody who’s traded for more than 10 minutes will tell you this – the big problem is, getting your mind around the clusters of good luck and the clusters of bad luck, as the hit-rate variably falls.

Also, read: How To Use Round Numbers In Forex Trading To Your Advantage

Now, if you’ve got a system with trend-following and the darn thing goes in to a range – the system doesn’t work. Many people will say: “Well, don’t trade a trend-following system when it goes into a range!” But, you don’t know the darn things is in a range until it’s been there for a while! You can put all the ADX’s (Average Directional Index) of this world on, – it makes no darn difference.

The market has to go sideways for a while, before you know it’s in a range. Similarly, if you’re buying support and selling resistance, and the market starts to trend – well, you’re wrong again! And then, there’s the noise in the market that causes you to get stopped out and stopped out, unless your stop-losses are really good, the market-makers will pick them off, all day and every day, and the algos will have what’s left after the market makers.

So, your hit-rate comes down and if you can be right, in the Forex market, 55–60% percent of the time, you’re right up there, – with some really good traders. You can make a heap of money with a 50% system. If you make three times more when you’re right, than when you lose. When you’re wrong – five times three is, fifteen and five times one is, five. That means, that in ten trades you risk a pound to make a pound, so you’ve got a positive expectancy system. And that’s great!

hundred dollar bills inside the aluminum case that represent Randomness In The Financial Markets

But, handling a winning system that is right 65% of the time, or 60% of the time, – that makes a fortune on paper, most people will lose with that system. Unfortunately, because, of these darn clusters of good luck and bad luck. And if you’re over 20’s you must have had periods in your life where everything goes well, and the periods in your life where nothing goes well and that’s a cluster.

They happen in every facet of life, Okay. And certainly, if you get to over 50’s and over 60’s, I have to say it to believe it…If you get over 60, you’ve got really good years and bad years, that’s for sure.

– “What’s the best week of trading that you’ve ever had…in terms of profit?”

– “Ahh…the best one, without the doubt, is a Copper trade that I did a lifetime ago. I took the trader on, while I was in South Africa. And I was here, in London…I remember, vividly…I was checking broker; I didn’t think, I had any positions, because I was sure that I’ve been stopped out of this Copper trade before I left South Africa. And, I was going along to whatch Celine Dion at the Royal Albert Hall. It was that “Titanic Era.” I don’t know, when was that – 1999…1997? A long time…20 years ago, in fact. What had happened was: I’d missed the stop, by a tick, or two, and the Copper price had ran up the page and it just ignored all those Fib (Fibonacci) levels and just kept on going. When I opened up my brokerage account; and I looked like an old spread-better here…when I opened up the brokerage account, there was thousands in it – completely unexpected. I think, that stands out as a wonderful trade, yeah! I just let it run, run up the page, for weeks on end, because I didn’t think I had a position…

– “You are one of the traders that gets currencies right. Where do you think other people go wrong?”

– “Well, I get currencies right, 60-65% of the time. Thirty to thirty five percent of the time, I’m wrong. And the reason that I’m still around in all of these markets is that, when I’m wrong, – I lose a little bit. And, when I’m right; I’d like to be three times bigger, when I’m right, that when I’m wrong. I’m not consistent with markets, because of my ability to read markets better than anybody else, and in fact, I am, probably, consistent in markets, because I manage risk well.

calculator, pen and a sheet of paper, all Randomness In The Financial Markets

And, I am conservative…many of my friends said to me: “David how the hell can you be a commodities trader, you’re most conservative guy in the world?”

When I go to the Airport, – I hire a car. I always take the Windscreen; they always ask you, if you want that and the tire waiver. I always take, and I take the Super Cover, as well…and, so they say to me: “How can you be a trader and take risk?” And the reason that I’m still around after all these years, and people have come and gone, is that, – I manage risk exceptionally well. The objective of doing business; whether you’re in the media business, whether you’re in the stock market, or the Forex market…the objectives of doing business is, to do business at the least risk.” – David Paul, Managing Director of Vector Vest UK

The bottom line is this, there is no way of beating the Randomness in the Financial Markets. You just have to be a good risk manager.

Consider loosing, as a part of the Game; operational expenses, if you will. Then, the only thing left to do is, – making sure that your winners are bigger than the losses.

Until next post,


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