Remove all bias
- Thread starter FreakofNature
- Start date
This is so true. For very short term trading I think its better to not read the news or ignore it. I read the news yesterday about oil, and had a short bias that caused a loss in my time frame. Today, I made a small profit but probably could have traded much better based on my technical indicators.
The good part even though Wed was a losing day, I was able to keep loss smaller than my wining days for a change. Was able to control my impulse to try to over trade and turn a loss into a win.
Today, my 1st trade missed my target by 3 ticks, but I was able to keep the loss small when it went back and stopped me out.
However, 2nd trade I went against my trade plan for the future that I was trading and took a type of trade setup that I no longer want to take due to the amount of heat it causes even when I am right on direction. They saw me coming on this trade since it went against me right after getting in. Due such a bad setup I forced to choose to either average in or take my stop. I averaged into the trade which I don't like to do, and will not need to do if I don't take these setups again. I took 1 contract off at BE. I left stop alone, and walked away from my monitor. Also bad, when I came back instead of leaving original target alone which would have gotten hit, I took 2nd contract off sooner once I was amazed to see I actually was in a profit instead of it getting stopped out when market went higher than my original entry.
Final trade was perfect. I was able to get in at a point where I had a reasonable stop that was actually less than my target. I went away, and was surprised when I came back that target was hit with ease making a profitable day and making up for my loss yesterday. If I can keep my losing days small, then it's easy to make up the loss the next day.
So bias that needs to be removed:
1) Don't worry about news when short term trading, price will tell you where it wants to go.
2) Have patience to wait or limit in on the right setup instead of chasing price. If you miss a trade and price gets away from you, move on to the next setup or wait for the next day.
3) Be able to take a loss and hold for a target. Not wanting to take a loss and either averaging in if that is not in your trade plan or moving stop down causes a bigger loss. Taking a smaller loss allows you to rationally reevaluate your next setup instead of hoping that price finally moves in your direction. However, you do need to give a trade room to breath since price may go against you before traveling to your target. If you don't leave your target alone you will be always taking bigger losses and smaller profits.
4) Don't have an emotional bias that causes you to revenge trade. You don't want to give back a week's profits in one day trying to not take a loss for that day.
The good part even though Wed was a losing day, I was able to keep loss smaller than my wining days for a change. Was able to control my impulse to try to over trade and turn a loss into a win.
Today, my 1st trade missed my target by 3 ticks, but I was able to keep the loss small when it went back and stopped me out.
However, 2nd trade I went against my trade plan for the future that I was trading and took a type of trade setup that I no longer want to take due to the amount of heat it causes even when I am right on direction. They saw me coming on this trade since it went against me right after getting in. Due such a bad setup I forced to choose to either average in or take my stop. I averaged into the trade which I don't like to do, and will not need to do if I don't take these setups again. I took 1 contract off at BE. I left stop alone, and walked away from my monitor. Also bad, when I came back instead of leaving original target alone which would have gotten hit, I took 2nd contract off sooner once I was amazed to see I actually was in a profit instead of it getting stopped out when market went higher than my original entry.
Final trade was perfect. I was able to get in at a point where I had a reasonable stop that was actually less than my target. I went away, and was surprised when I came back that target was hit with ease making a profitable day and making up for my loss yesterday. If I can keep my losing days small, then it's easy to make up the loss the next day.
So bias that needs to be removed:
1) Don't worry about news when short term trading, price will tell you where it wants to go.
2) Have patience to wait or limit in on the right setup instead of chasing price. If you miss a trade and price gets away from you, move on to the next setup or wait for the next day.
3) Be able to take a loss and hold for a target. Not wanting to take a loss and either averaging in if that is not in your trade plan or moving stop down causes a bigger loss. Taking a smaller loss allows you to rationally reevaluate your next setup instead of hoping that price finally moves in your direction. However, you do need to give a trade room to breath since price may go against you before traveling to your target. If you don't leave your target alone you will be always taking bigger losses and smaller profits.
4) Don't have an emotional bias that causes you to revenge trade. You don't want to give back a week's profits in one day trying to not take a loss for that day.
Worst* advice I've ever heard. 180 degrees WRONG!
(OK, I exaggerated... the worst advice would be "fight the Fed".... though I never heard anybody advocate that.)
It seems most of the posts in this thread so far are talking about daytrading.
What about swing trading stocks. Is it doable anymore? So the bias on a daily basis can just change anytime when price move above or below a moving average?
And can't bias for daytrading be as simple as seeing where price moved in relation to a moving average on a daily chart than trading on an intraday chart?
What about swing trading stocks. Is it doable anymore? So the bias on a daily basis can just change anytime when price move above or below a moving average?
And can't bias for daytrading be as simple as seeing where price moved in relation to a moving average on a daily chart than trading on an intraday chart?
Even the very best advice cannot please everyone.
Tell people not to play with fire and they will go right on and burn the house.
Youre telling a child not to play on a swing set. In the wrong hands a swing set is dangerous, but.....
This is very simple, i dont know why people want to make it complicated. Or maybe we are all talking about the same thing, but a different way. But the point is, after you place a trade based on your chart observations, and you find out the trade is going in the wrong direction, and your in the red, its okay to admit you were wrong and its okay to acknowledge that price could be heading in the opposite direction. Don't let your initial assessment cloud your judgement as to where price is heading. This is probably the reason traders hang on to losers as well. I mean i don't understand what is so hard to understand. Leave bias at the door when your executing your trades. If you see price reverse, and your in the red, or price has hit your predetermined stop, don't be afraid to go in the other direction. To me i see this as trading with a clear mind, your just following price, and not your bias of what you think should be happening.