How to avoid Knowledge Bias in Day Trading ?

[Simples]

Doesn't it look like CHASING the market ? I'll certaonly END UP GIVING ALL MY MONEY IN COMISSION !!!

My point wasn't particularly about Breakout Pattern it was just an ullustration for the Bias Knowledge , for example someone who identify this rising trendline as a bullish opportunity is a little bias by that and ignore other informations due to this bias , for TA it can just be a crossover of the MACD line in the rising area , and be biased also by that ...

Otherwise Thanks for the reply

"Chasing the market" doesn't mean what you seem to imply. It's basically a late entry, with huge risk of being way too late.. Nothing to do with commissions.

PA above shows a dull horizontal market for some time, then volatility breakouts. Could go either way, so need to be taken into account.

 

[bone]

1. Like Volpri, I didn't get a bearish bias at all looking at the OP's first chart.

2. It's not clear to me why a "knowledge" bias is a relevant issue.

3. If you have an opinion about the future direction of the market, and the market proves you wrong, if anything that would check any preconceived bias I had held. The market is always right.

4. That's why a highly mechanical trading system combined with a highly disciplined practitioner or an automated trading is such a good idea for many traders. You honor your stop loss and move on to the next trade entry.

5. You will find no comfort in stroking your ego with the markets. There are no "masters" of the market - only survivors.

 

[TurtleLearner]

I Would skip the TA for couple years as you are lacking patterns, you have other patterns on chart that either you not studied or discover. Not all patterns are for entry, some show when NOT to take signals, some will show when to take profit early, and why I prefer to day trade currency futures as they show volume. You also want to study "wicks", so like in an uptrend, long wick on red candle below close or like green candle in downtrend and above close-what does this mean, also pinwheels, head and shoulder tops act little different than H&S bottoms plus how it is formed matters, is shoulders tighter to the head or looser. Speed of market or sharp angles as in what falls or spikes up fast often reverses, not necessary reverses entries, but certainly forms tighter protective stops. Secondary highs/lows which are failures to push beyond last extremes as this forms A-B-C, many buy above "B", I prefer waiting for a close above "B" then wait for little pullback, double bottoms with 2nd bottom having more volume than first and can be few ticks lower showing they were running stops and price held. And get probabilities to give where you have better edge.

Volman is ok, but learn patterns in general more and design your own patterns that are not in books.

Good trading.

Thanks for your help .

If you authorize me , I have additional question for you

1-By learn Pattern,do you mean learning Chart and Candlestick Pattern ?
2-How to be able to design my own pattern ?

I'm a noob in those field so sorry if this question sound stupid
Thanks in advance

 

[TurtleLearner]

In your first chart i don’t see a bearish bias. True there was a BO south (big bear bars) but the last three bars were smaller and buying enters on last two small bear bars followed by bull bar with good buying indicated as tail on bottom and closed near it’s high. And a gap between it’s (bull reversal bar) close and the the close of the last bear bar. Then a retracement of the bearish BO that actually, basically, almost entirely reversed the big BO south. That is bullish. Plus higher lows ..higher highs..up to your white box. That too is bullish. And more and larger bull bars closing near their highs with gaps between closes of bars and shallow pb’s in the retracement with the exception of the last pb where your white blocked out box begins. These gaps and shallow pb’s too are bullish.

In addition, since the reversal from the bottom UP to THE WHITE BOX....well a rather tight bull channel has formed. That too is bullish. Granted the last two bear bars before the white box broke south of the tight channel but understanding that 80% of BO attempts fail and the fact of higher lows in the channel with larger bull bars and gaps between closes...well ...the odds increase that this will be a failed BO of the bottom of the tight channel.

Also, by the time PA reaches your box a triangle has formed for a triangle BO mode all at the bottom of a tight bull channel.

Bottom line: going strictly by PA by the time PA (even way before) reaches your white box I would be thinking bullish especially given the fact that the retracement from the large BO south was in the form of a multi bar tight bull channel ( higher lows higher highs) and it retraced nearly 100% ...well i would not be bearish by time price reached your box but I would be bullish or at min sideways range for several bars. This is how I would read this price action. Of course I could be wrong. I don’t know what happened after your box but whatever happened I would adapt on the fly. Probability: bullish channel would continue some more or at min morph into some sort of sideways range trading. Least probability is a break south. Nevertheless, it can happen. But I am talking probabilities or likely possibilities given the context of the PA.

Thanks for this constructive analyse , it helps me alot to have this contrarian view .

 

[TurtleLearner]

Knowledge is not a bad thing when it is based on facts. Also part of what you call bias is an element when the bias is no longer accurate based on facts.

You have a fear based on a notion of chasing the market. What differentiates this from entering the market when it’s sentiment has in fact actually changed?

If you find yourself suffering losses by ‘chasing the market’ that can only mean one thing. That you have not done enough due diligence to see the difference between price oscillating on a faster timeframe and sentiment change on a larger timeframe.

To begin to see the difference, it would help if you include 1/2 of the market’s granularity of information than not.

By choosing not to include it you get the results that you get.

From your chart and interpretation, you have not differentiated what is a Dominant move nor a non-Dominant move.

Traders trade what they see. If you want better results, you’ll have to do the work to ‘see’ better. Doing drills accelerates this process.

Candles are pretty to look at with emphasis on the inside spread between groupings but bars show trending better and support a more relaxed mode of monitoring and analysis.

Candles and bars although can be traded with the same, support different trading methodologies.

Thanks for your reply .
I will try to integrate bar chart and see the differences, it would certainly be very hard cause I had never trade with it .
By granularity of market do you mean , assessing volatility, volume ? or is it another concept ?

Thanks in advance

 

[TurtleLearner]

...that cannot adapt on the fly.

ok

 

[schweiz]

So this is what I usually do. I will take all signals without hestitation because there is no way to predict what's going to happen next.
when price breakdown, go short it.
when price reverse to go up, go long it. We will never know how much the price will go up.

That's how you get caught in a whipsaw and take with high probablity each time a loss.

If I have that kind of problem there are only 2 options:

• find a better way to filter out the really good trades.
  
• if I cannot I don't trade any of them.

If there is no way to predict what's going to happen next, you are just gambling, not trading.

 

[TurtleLearner]

Trading 5M charts is for suckers ...

ok

 

[Sprout]

Thanks for your reply .
I will try to integrate bar chart and see the differences, it would certainly be very hard cause I had never trade with it .
By granularity of market do you mean , assessing volatility, volume ? or is it another concept ?

Thanks in advance

Yes, you have the general direction. To further explore market granularity you would have to deconstruct how a single bar builds in relation to the above.

For price, volume and volatility form a relationship. They influence each other in observable and specific ways when defined will change how you ‘see’ the market.

Reading about concepts are more like introductions. When one engages in performing Due Diligence by doing drills, that’s what builds perception, facility and capacity.

 

[Handle123]

Thanks for your help .

If you authorize me , I have additional question for you

1-By learn Pattern,do you mean learning Chart and Candlestick Pattern ?
2-How to be able to design my own pattern ?

I'm a noob in those field so sorry if this question sound stupid
Thanks in advance

This guy is awesome on patterns.

http://thepatternsite.com/index.html

and finding patterns takes lifetime of testing, you just start testing what you might find that has reoccurring directions.