Speaking about Forex trading efficiency, people often mention teamwork. Who is more efficient on Forex: individual trader or a team of traders working in a synch? Traditionally, every private investor is for himself on Forex. However, teamwork may vary a bit, being formal or informal. Traders have not agreed on teamwork efficiency though. Some say that a team is totally unsuitable on Forex while others find good reasons in defense of a collective mind. We will consider pros and cons as well.

Physiological aspects of team and individual trading are considered as the most controversial issues. Trading alone, you are alone responsible for your decisions which you do not need to coordinate with other traders. You spend on market analysis as much time as you deem necessary to make a trade. Still a possibility that you make a wrong decision is high. A man has limited capabilities, and provided that you are not enough skilled, a risk to lose is much higher.

In a team, responsibility is shared by its members both psychologically and econominally. A team collectively discusses a problem and elaborates a decision that will satisfy all its members. It does not annul risks though. Collective decisions may be even more risky than individual. It is again associated with psychology of teamwork: a team may overestimate the value of a profitable trade and underestimate the risk of losing. Working as a team, people normally tend towards positive risks. Moreover, members may confide decision-making in their experienced co-member or leader thus decreasing efficiency of collective work.

Fortunately, a team may incorporate different people with different skills who can provide together a comprehensive evaluation of challenges. In addition, a total capital of a team is generally more that a capital of an individual trader.

A sort of hierarchy is recommended even for informal teams. Members should share coordinated purposes rather than seek personal profits. The main challenge is time which is required more to make a collective decision, especially when members disagree. But a team may have a formal or informal leader with a decisive vote. Team members can also set certain limits and divide scope of activity.

There is no categorical answer on whether it is better to trade on Forex alone or in a team. Nevertheless, most traders agree that if you work in a team, you should better make sure that your team consists of professions only who know their business and can follow rules.

Added by Kristina Leshkevich,
InstaForex Clients’ relationship manager