Distorted Preconceptions

On this page we shall look at presuppositions that a person can have about a graph that are based on flawed perspectives. When a person enters the trading world, it is a new world and it is natural to try to connect that existence with what has been known on the outside. The problem is that the trading world cannot be always connected to what has formerly been known, in many ways it is its own world. It is important that the speculator undertakes self-analysis, to evaluate ones own presuppositions and to weigh them up in light of the reality of the graphs. For example, below is an exerpt of cable (GBPUSD), is the graph going to go up or down?

Going up or down?

The reason for the question is because one preconception that can get in the way is the idea that the graph cannot break out of the bounds in which it is placed. The boundaries of a graph are limited by the size of a computer screen, not by the possibilities of the price of a specific currency. The answer to the previous question is below, an arrow points to where the previous graph ended:

 Up or down answer

It may appear on the first graph that it is not possible for the graph to go up, but this is a distorted preconception about the boundaries of the screen.

A preconception that I suffered from personally is that related to gravity. Call me weird but… I used to assume that a price had to go down soon because (for some reason) gravity pulled things down! Check yourself, that you do not have similarly embarrassing ideas…