Directional Bias
- Thread starter jboydston
- Start date
so obviously there will be way way way more short trades.
I have a bias and it changes from month to month, week to week, day to day, minute to minute, tick to tick, depending on what time frame I'm watching.
theres no such thing as an objective daytrader. As soon as you put on a trade, you become subjective.
theres so much talk about people not trading what they think will happen, but trading what is happening... it's all just a psyche thing or a way to make it so that they never have to be wrong, because hell, they aren't biased one way or another...
trading is the action based on prediction or bias, whether short term or long term. everyone who puts on a position is biased.... the only way to be truly unbiased is by not trading, or by being fully hedged.
edit: even then, you are biased. By not trading, a person is thinks that they will risk less or make more by doing such. And by being fully hedged, they are either expecting the market to do something volatile, as in an option spread. Or a premium to decay, as in an NDX/NQ spread.
I have a bias and it changes from month to month, week to week, day to day, minute to minute, tick to tick, depending on what time frame I'm watching.
theres no such thing as an objective daytrader. As soon as you put on a trade, you become subjective.
theres so much talk about people not trading what they think will happen, but trading what is happening... it's all just a psyche thing or a way to make it so that they never have to be wrong, because hell, they aren't biased one way or another...
trading is the action based on prediction or bias, whether short term or long term. everyone who puts on a position is biased.... the only way to be truly unbiased is by not trading, or by being fully hedged.
edit: even then, you are biased. By not trading, a person is thinks that they will risk less or make more by doing such. And by being fully hedged, they are either expecting the market to do something volatile, as in an option spread. Or a premium to decay, as in an NDX/NQ spread.
most trading strategies discussed here are directional. therefore they have a bias for sure.
even when directional traders won't admit it.
the proof ? if most of your trades are short you do have bias. because they are bull markets all the time, but you chose to trade directionally markets in a down trend and short (which is what I'd do too).
Since you make a choice, you have a bias.
but not all trading methods are directional. there are many non directional systems. with them you really don't have a bias, actually you don't care you are interested in volatility, not direction.
In that case, the trader has no direction bias.
He has a volatility bias though !
So I guess you ALWAYS have a bias. that's your edge (or what makes you lose money!).
tntneo
even when directional traders won't admit it.
the proof ? if most of your trades are short you do have bias. because they are bull markets all the time, but you chose to trade directionally markets in a down trend and short (which is what I'd do too).
Since you make a choice, you have a bias.
but not all trading methods are directional. there are many non directional systems. with them you really don't have a bias, actually you don't care you are interested in volatility, not direction.
In that case, the trader has no direction bias.
He has a volatility bias though !
So I guess you ALWAYS have a bias. that's your edge (or what makes you lose money!).
tntneo
Tnt I would have to respectfully disagree with the above statement... Most of my plays over the last 2 years or so have indeed been short BUT that does not neccesarily mean that "I" have a bias to the short side... The market has been in a solid downtrend therefore she has the bias to the downside...
PEACE and good trading,
Commisso
I'm not big on daytrading in general, but I think that most daytraders in the late 90's had a bullish bias, and the ones that maintained that bias got killed since 2001. Personally I try to be in sync with the longer term trend but often go against what I call countertrend moves ( bear market rallies, bull market dips, etc. )
I agree with you that after a trade is put on, the information the market provides is probably interpreted subjectively. However, I disagree that one cannot be without bias before putting on a trade. (I'm not sure you need to restrict that statement to just daytraders, it should apply equally to all daytraders. Or is it that you find a greater proportion of daytraders who claim to be "objective" about their trades?)
My dictionary defines "bias" as "A preference or an inclination, especially one that inhibits impartial judgment". Therefore, I would say, that in my case at least, I do not have a subjectively decided preference that "inhibits impartial judegement" before the trade is placed.
imho any intrinsic long/short bias is a weakness and should be stamped out through market study, method study and self study.
the direction really just shouldn't matter all that much, especially for short termers.
a good friend of mine has a strong short bias, and he justifies it by the fact that he undoubtedly makes more money on short side. However, it's chicken and egg. My belief is that he makes more $$$ on shorts because he "sees" the bear picture clearly but long side gives him static.
i was a raging bear for pretty much all of 1999 and had little to show for it. my stupidness at not hopping onto that runaway train for even a little while opened my eyes to the fact that one is much better off being able to go either way w/ ease, like having equal backhand/forehand at tennis.
the direction really just shouldn't matter all that much, especially for short termers.
a good friend of mine has a strong short bias, and he justifies it by the fact that he undoubtedly makes more money on short side. However, it's chicken and egg. My belief is that he makes more $$$ on shorts because he "sees" the bear picture clearly but long side gives him static.
i was a raging bear for pretty much all of 1999 and had little to show for it. my stupidness at not hopping onto that runaway train for even a little while opened my eyes to the fact that one is much better off being able to go either way w/ ease, like having equal backhand/forehand at tennis.