Regulator body from New Zealand, the Financial Markets Authority, issued a paper that can be used as educational material for everyone interested in financial investments. The main concern of document called “Using behavioral insights to improve financial capability” is how traders make their decisions and what affects them. A group of specialists wrote this paper in order to explain how psychology affects trading results. The paper is easy to understand and gives useful advice for all type of traders, with a vision to help them avoid possible risks and mistakes: “This paper summarizes the current understanding of these behavioral biases and influences in retail financial markets. This is important, because, without a good understanding, the policies government develop, and the products and distribution models industry provide, can lead consumers to make choices that are predictably mistaken.” Psychology and Trading Results FMA document reminds traders how financial markets are extremely complex, and how, in order to place successful trades, the trader has to carefully approach every trade. One of the things that extremely affects trading results are biases, our beliefs, and preferences that are used to rationalize the decisions made. FMA points out three factors that affect trading: Preferences Beliefs Decision-making rules Results of the Research UK financial Services Authority (now FCA) has also executed a research, which was later taken over by the World Bank. Scientific research in 10 countries proved that there are some elements that affect the trading success, no matter where the trader lives: Day-to-day money management Planning for future needs Choosing appropriate products Being informed/getting help FMA prefers EAST method for the best trading results: Making things easier by using all tools, and opportunities provided by financial company Making trading more attractive by acting on popular trends Making things social by using social networking trading tools Making things timely by acting in specific moment In this document, FMA is also asking providers of financial services to provide correct, necessary and truthful information, as well as all needed features to traders. It is advised to explain and introduce financial services to traders, without downplaying risks. Usage of exploitative services and scams is not recommended, as all business should be done in good faith. However, these recommendations are only that – recommendations and are not obligatory to follow. Read full research here.