Breaking Your Trading Bias

Trading Bias Definition:

A trading bias is the tendency that leads traders and investors to follow a predetermined path in a trade or investment even when it appears they are wrong from a fundamental or technical perspective or both. A bias about a trade occurs when there is a loss of perspective because their opinions or predictions are held even after they are proven wrong. When you have losses in the timeframe that should have lead to profits it is time to reevaluate your entry. When traders and investors hold on to a bias many times it is because they lose the ability to accept evidence that shows them they were wrong. To break the spell of a bias toward your market position let moving averages be your trend signals, let stop losses be your risk managers, and let the price action prove you wrong. How do you know when you are wrong? You are losing money. Abandon your bias in favor of a trading plan and a system that reacts to price action.