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Trading without Directional Bias
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Trading without Directional Bias

  #1 (permalink)
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Trading without Directional Bias

Directional bias over the years probably cost me more money than just about anything in trading. It took me years and years to finally come to the point where I really don't care and have no impulse to buy or sell based on what direction I think the market is going. Sure I have moments where I think the market won't go any higher or lower etc.... but no impulse to do anything. How did I lose that directional impulse? Pain and loss. My brain was retrained by pain. Touch a hot stove enough and you finally get a hot stove will burn you. I am stubborn so it took a long time but eventually pain had it's way.

Trading without bias really is a great place to trade. I was reading some other posts on the board today and was reflecting on my own trading journey when I realized 75% of the time I don't even know if markets I trade closed up or down. That may sound irresponsible but trading intraday it really does not matter for my system so why pay attention to it. Intraday trends and volatility matter to my system so I pay attention to those things but could care less where the market closes. I think in trading it is important not to pay attention to things that can be a distraction. If I spend time looking at things that are not a part of my trading logic I end up going down paths that hurt me more than help me. To much information particularly in intraday trading can cause you to form biases that can lead to impulsive erratic decisions. Information overload causes me to form an opinion and I do not not want to have an opinion about the direction of the market.

I am not suggesting anyone take my approach other than determine what is important to your buy/sell logic and don't focus on what does not matter to that logic.

Plus paying attention to less saves some cash outlay on computer monitors as well. Instead of 6 I now only need 1.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."

Last edited by liquidcci; April 15th, 2013 at 12:12 PM.
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  #3 (permalink)
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Just to add to my thoughts above. To keep from getting directional biases in my intraday trading I find it hard to trade longer term positions in the market. I really like swing or even longer term option positions especially verticals but I find when I have them on I root for direction to much.

They are different animals on different time horizons and can easily be traded at same time but the psychology for me is difficult. I get pulled back into my biases to easily. So for the moment I have to choose but hope to mature enough one day to do both at same time and not have the longer term pull biases into my intraday trading.

Mastering yourself is such a long term process.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."

Last edited by liquidcci; April 15th, 2013 at 01:55 PM.
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In perhaps a similar way as you, I also do not use or care about the word "trend." If the market is down 20, it's no reason for me not to buy because the "trend" is down, and on another day if it's down 20 it's no reason for me not to sell because it's "gone too far."


liquidcci View Post
Mastering yourself is such a long term process.

Amen, a never-ending process!

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  #5 (permalink)
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@josh my system likes a strong trending market and decent range but only intraday matters. Which direction and where it closes is mostly irrelevant.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."

Last edited by liquidcci; April 15th, 2013 at 05:24 PM.
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What is wrong with having a bias?

Take today for example. The ES started the day with a short inventory. We were below friday value area so my level of interest was influenced by these considerations and systematically my level of interest become the developing Value Area High to get short or the 1 minute opening range. The pivot range was extremely tight suggesting a possible trend day. All of these helped me formed some expectation to the downside. So you can say my bias was to the downside and it helped me tremendously in selecting my levels.

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trendisyourfriend View Post
What is wrong with having a bias?

Take today for example. The ES started the day with a short inventory. We were below friday value area so my level of interest was influenced by these considerations and systematically my level of interest become the developing Value Area High to get short or the 1 minute opening range. The pivot range was extremely tight suggesting a possible trend day. All of these helped me formed some expectation to the downside. So you can say my bias was to the downside and it helped me tremendously in selecting my levels.

@trendisyourfriend I guess it depends how you define bias. For me personally my system takes signals based on strength of the trend etc but my criteria is pre-defined. There is no watching the market and me forming a personal opinion on where I think it might or might not go. At least I don't let that enter into my trading. Days like today my system took quite a few trades and made good $ but my bias did not enter into it. My system said trend is strong and down so look for shorts. My bias at some point might have said "man the market is down big" maybe I should take a shot at going long. Most likely had I done that would have lost or stayed out of short trades I should have taken. Hope that clarifies.

On the larger picture my bias would be the market is ridiculously high and should correct big time based on common sense. Maybe I am right and this is true but if I let that enter into my intraday. I would struggle when long opportunities present themselves and possibly miss some good trades. Point being maybe my bias is correct or maybe not but for how long will I be right. I find my opinion to just be a distraction as a system trader. Better to just let the probabilities work with as little noise as possible.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."

Last edited by liquidcci; April 15th, 2013 at 06:37 PM.
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