As a trader, you’re faced with two opposing forces: The inherent uncertainty and instability of the markets and a deeply held personal desire for certainty, comfort and control. That tension is central to how we address market risk, volatility and predictability. But renowned trading behavioural expert, Gerald Ashley, warns that you must be aware of what he calls the “illusion of control” in the second of a series of reports on how your behaviour influences your trading success.

Gerald explains that it’s human nature to pick on a few things you really understand and then you’re fooled into thinking you fully understand the market. That’s the road to dangerous losses, he says, especially when you convince yourself that you’re right and the market is wrong.

You need to recognize this kind of behaviour and change accordingly says Gerald, who’s written numerous books on emotions and trading. You must guard against over-confidence, he says, and he has other tips as to how we can all trade smarter.