Today, I had a conversation in the APA Zones skype room and this is how it went…..
G: Well so much for the Long Play today.
G: You know seeing the TF market retrace this much can give you second thoughts about if my bullish bias was really a good call this morning or not.
G: TF didn’t break out of its Globex Range at all.
Michele: It has been said by many traders that it is not good to have a bias in the markets at all but to let the market ‘tell’ you what it is going to do
Michele: Some people might call your bias a ‘limiting belief’ as it did not allow you to see with clear eyes all the opportunities presented, but focused you on looking only for long entries.
G: Yeah, it good to read the candle sticks and not how badly I want to be correct.
Michele: Here is the thing… if you don’t have a bias, you can’t be wrong! And since our ego’s fight tooth and nail to make us right, ‘It’ limits the things we see to make a decision. ‘It’ looks for what will support ‘Its’ bias/view/belief.
Michele: Then it becomes a right vs. wrong decision instead of an ‘it just is’ decision
G: So at what point does a trade setup become a bias?
Michele: It is based on the ‘probabilities’ of your set up working. And this is based on your experience with your set up from the past uses of it.
Michele: It is a statement of “in the past, this has worked out more than not so I am taking this stand and we shall see what happens” There is no real bias to it. If we add the bias, then our ego and emotions get involved and we start doing things like moving our stops or targets or doing self talk that is not of a pleasant nature.
G: On the daily it looked like we really need to retest the previous High which we do on several of the markets. But on the intra-day chart it’s HH/HL. type of deal.
Michele: So what does your experience tell you with those facts?
Michele: My 60 min chart says we are in consolidation. With that, my experience says anything is fair game.
G: My bias is an open door for emotions. So I need to keep that door closed.
G: Otherwise it’s too hard to take the GH/GL [Globex High/Globex Low] level or spot my reversal points.
Michele: very true. And your vocalized biases can also influence others
G: Just like how I have let other people’s views in the past influence me in the past.
Michele: Not sure if there are others seeing this conversation but would like to know how your market biases have affected your trading…. please chime in
G: Taking the trade setup when you have a bias is limiting. And is really trying to make the world fit into “my box”.
Michele: Exactly! And we all know, we can’t influence the markets
K: Michele, so suppose we open above yesterday’s range, with daily or 60M chart already in an uptrend, wouldn’t you say that your expectation for that day would be buy pullbacks to demand? Instead, are you looking to sell supply zones?
Michele: K, it really does depend on your trade style. If you are a trend trader, then you would look to buy pullbacks until the market did a move that told you it was switching directions. If you are a counter-trend trader, then you would sell supply until the market told you otherwise.
Michele: Each of us analyzes the markets differently based on our trade plan and experience. The rule is to also know that the markets cannot be influenced by our thoughts and so, we need to be open to what the market is telling us and not what we want it to do.
Michele: Now, part of that is how we approach the markets and the words we use. Saying “I feel/think/have a strong belief that the markets are going to go………”, is different than saying “my indicators are all/mostly saying ……….direction and so I am looking for …….. set ups until my indicators tell me otherwise.”
Michele: The second statement; 1) leaves you open to see the change in the indicators, and 2) does not commit your Ego to a position and so allows you to trade the markets and not your beliefs.
Michele: Does that make sense to you K or anybody else reading this?
D: Makes sense to me
G: Yeah, so don’t attach your feeling into the statement rather just facts as you see them???
Michele: Exactly!! If you don’t have a strong ‘opinion’ about it than your ego/body/soul/subconscious does not have to try and ‘prove’ you are right
Michele: It opens up so many more possibilities and keeps you from limiting yourself
K: Michele, yes it does. I use “expect”, “probable” for my pre market game plan. Of course the market is going to do what the market wants to do, but I think the game plan is also important. I am not going in and taking every PIN BAR I see on my chart when we are in an uptrend (whether it be on your trading time frame or longer time frames)
Michele: Good K. And your trading shows it. You are very skillful in your trade set ups and management of them.
Michele: Although it may seem like just a slight difference to use another word, it makes a BIG difference to your subconscious and how it processes the information and makes decisions.
G: I was just looking at the stock twit control panel. It has a “bias” button. And this conversation has me thinking if I ever want to use that button again to say if I’m going long short or what not.
B: Makes sense Michele – I like it
G: We don’t like emotions in our trading!
Michele: The goal is to get them out of our trading. They don’t belong there. They belong in other areas of our life and not trading.
My question to all who read this is, “How has your bias effected your trading?” Please contact me so we can get that bias out of your trading and allow you to see the market for what it is.
Until we meet next, Green Trades Everyone!