Rational Choice Theory in Forex Trading: An Academic Analysis
Rational Choice Theory is a powerful and influential economic theory that suggests that individuals make decisions in their own rational self-interest when faced with a decision. The idea is that people take into account all the available information and make the best decision based on their personal preferences. In Forex trading, Rational Choice Theory suggests that traders should make decisions based on their own personal objectives and risk preferences. With this in mind, traders should understand market conditions, understand their risk tolerance, and determine what type of forex strategy best insulates their risk exposure.