Describe a possible psychological mistake through a decision you can check: an increased limit, ignored evidence or an order without a recorded reason. A label such as FOMO does not establish the cause of a loss. This review offers ten prompts for a journal, with separate checks for the method, execution and costs.

What this list can establish

The ten items are a selected teaching list, not a ranking of the most frequent or costly causes of retail losses. Some are concepts from decision research; others are informal trading descriptions. They can overlap within one decision. Do not count each label as a separate trade or independent cause.

The SEC-hosted summary of the Library of Congress report discusses active trading, overlooking fees and the disposition effect: holding losing investments while selling winners. That summary does not measure a universal percentage of Forex losses attributable to psychology. A weak method, expensive execution or incorrect data can also produce losses.

Ten prompts, including FOMO and revenge trading

Examples to investigate, rather than a diagnostic test
PromptPossible observationQuestion to record
1. FOMOEntering because a move happened without youDoes an eligible signal still exist, with stated risk?
2. Revenge tradingMaking recovery of the previous loss the goalDoes the new order have its own justification?
3. OvertradingOrders outside the method’s conditionsWhich orders qualified and what did they cost?
4. Loss aversionPostponing exit solely to avoid realising a lossWas the rule changed after seeing the loss?
5. Confirmation biasKeeping only arguments favouring your thesisWhat available evidence could challenge it?
6. AnchoringRequiring a return to your own entry priceDoes that price have an independent current rationale?
7. Self-serving attributionEvery gain is skill; every loss is bad luckAre both judged by the same evidence?
8. Hindsight biasRemembering a forecast as obvious after the moveWhat was actually written beforehand?
9. OverconfidenceCertainty exceeds what the evidence supportsWhich uncertainties and alternatives remain?
10. HerdingAnother person’s position replaces your assessmentWhat are your own exposure and exit conditions?

A post-breakout purchase does not by itself demonstrate FOMO. A new entry after a loss may follow a valid new signal. A larger quantity can even have smaller planned price risk if the stop distance decreases; actual exposure and execution limitations still need checking. Investigate the decision and recorded reason instead of diagnosing its motive from the result.

For an entirely fictional review, label decision D1 FOMO, herding and overconfidence; D2 FOMO; D3 herding; D4 and D5 receive no tag. There are five tags but only three tagged decisions: 3/5 = 60%. The two untagged decisions are 40%, without being proven correct. Report tags and distinct decisions separately; this is a counting exercise, not measured psychological prevalence.

Two evaluation axes: result and compliance

Replace a single “good trade” label with two records. Our scheme separates the result’s sign from execution of earlier rules.

Scroll sideways to see the full diagram

Two evaluation axes: result and complianceA matrix of two separate questions. Columns mark positive or negative results; rows mark compliance or violation of predefined conditions. Profit and loss can occur in either row.PROFITLOSSPlanfollowedPlanbrokenComplianceto recordComplianceto recordViolationto reviewViolationto reviewThe result does not alter the earlier record.
Scheme assumptions: Rules and evaluation were fixed before the decision; the record, not its outcome, establishes violation. Compliance does not prove profitability. The study by Baron and Hershey examines evaluation of described decisions under uncertainty. Our diagram is a journal aid, not results from a trader study.
A profitable decision can still violate the recorded plan.

Counterexample: The plan required volume matching an earlier calculation, but the execution record shows a larger volume. A later profit does not undo that deviation. Separately record “positive result” and “volume rule violated,” rather than change the assessment after learning the exit price.

Overtrading, loss aversion and the cash calculation

Additional entries can incur fees. Financing depends on the instrument, account and holding period; it does not automatically accrue on every trade. If actual entry/exit prices already include Bid/Ask, do not subtract that spread again.

Prospect theory values changes relative to a reference point and describes an asymmetry between gains and losses. It does not establish that every person experiences every loss as exactly twice a gain. The disposition effect is an observed investment pattern; an individual early exit or moved stop does not alone prove its psychological cause.

In a separate hypothetical USD model, six price gains of 50 USD and four losses of 100 USD give 300 − 400 = −100 USD. Add a previously excluded round-trip fee of 2 USD per trade: ten fees total 20 USD, so net result is −120 USD. The 60% win rate does not establish profitability or explain the trader’s motives.

With only fixed outcomes +50/−100 USD, break-even before the extra fee is 100/(50 + 100) = 66.67%. After the assumed fee, outcomes are +48/−102 USD, giving 102/(48 + 102) = 68%. These are algebraic thresholds for assigned outcomes, not estimated strategy success rates. Actual averages and other exit types can change them.

Confirmation bias and anchoring: preserve the contrary case

Before a decision, record the thesis and evidence that would weaken it. For a fictional long GBP/USD, saving only the release you interpret as supportive and deleting a contrary release would leave an incomplete record. Neither the illustration nor a release name supplies a universal exchange-rate reaction.

In another hypothetical example, EUR/USD entry 1.0900 and current price 1.0830 are 70 pips apart at pip 0.0001. That distance is arithmetic; it does not prove that 1.0900 is permanently invalid or that price must return there. Examine whether keeping the position follows current conditions or only the wish to recover an entry price.

Self-attribution and informal descriptions such as tilt

Compare skill and luck explanations consistently after gains and losses. Preserve the initial forecast, missing information, order changes and fills. A profitable deviation can still violate a rule; a compliant trade can lose. Compliance alone does not prove the method sound.

“Tilt” is an informal description of impaired decision control. It is not a medical diagnosis, a necessary stage of burnout or a condition with a universal recovery time. Faster clicks or a third loss alone do not establish its cause. If you cannot reliably operate the account, stop adding risk and arrange management of existing positions, pending orders and automation.

Hindsight and overconfidence: keep research in its scope

A saved forecast lets you compare what was known before an outcome with later recollection. Baron and Hershey’s study examined judgments of described uncertain decisions; our journal matrix is an educational aid, not a measured result for Forex traders. Keep process and cash outcome visible together.

Barber and Odean’s 2001 study covered common-stock accounts at one US discount brokerage from February 1991 to January 1997. Men traded 45% more than women in this sample; their trading reduced annual returns by 2.65 percentage points relative to holding the beginning-of-year portfolio. This historical result does not establish an effect for current Forex traders or diagnose a particular winning streak.

Herding and recent information need evidence

Agreement with other traders is not automatically an error. The question is whether you understand the trade’s rationale, eligibility and exposure. A widely repeated narrative can be right or wrong; its popularity alone does not identify the end of a move or an institutional counterparty.

Giving recent observations undue weight is another review prompt, often called recency bias. Fresh information can also justify a changed decision. Keep both the earlier plan and new evidence, rather than treating every update as irrational. Neither this prompt nor tilt adds a separate diagnosis to the selected ten-item table.

Introduce one control you can actually inspect

  1. Check an order before sending. Record instrument, direction, quantity, intended exit and the basis of the risk amount. A checklist is a proposed control whose use and errors can be examined; a minute’s delay does not guarantee sound judgment.
  2. Record plan, execution and result separately. Preserve timestamps and changes, including valid modifications. Mark missing information as unknown; one month of entries does not reliably separate all luck from skill.
  3. Specify when to suspend new entries. Activity limits and breaks should match your method and ability to manage the account. Five daily trades or thirty minutes after every loss are not universal standards. A break needs arrangements for outstanding risk.
  4. Review a concrete breach. For example, compare planned and executed quantity, including profitable deviations. Overlapping tags cannot identify five independent errors in three decisions.
  5. Make any review with another person specific. Agree which records to examine and protect account credentials and personal data. External review can expose missing information; it is not guaranteed to remove biases or create a trading edge.