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Directional Bias
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Directional Bias

  #1 (permalink)
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Directional Bias

Seems my biggest problem now that I have some of the mechanical stuff worked out is this. Directional bias.

I often go into a session looking at a daily chart, or perhaps the overnight session and try to find the larger trend. I would prefer to be on that side of the trade so sometimes I get locked into a single directional bias and as you know, that's not always healthy intra day.

So the trouble is, I have trouble changing my bias if market conditions change. Not always, but sometimes and when I do, its really dangerous.

Has anyone experienced this and if so, what are some ways you have overcome it?

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  #2 (permalink)
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  #3 (permalink)
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When u are on the wrong side is not simple change your mind and tell yourself you are wrong, so the consequence could be remain on the wrong side. A way to overcome it could be stop trading for that session after some loss to avoid a bigger one.

Luke.

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  #4 (permalink)
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One of the easiest things to do that I recommend is identifying points in the market (price, price action) where you would be wrong about your "bias".

If you think the market is trending higher, at what point would you think that is no longer the case, or admit you were wrong? It may be price, it may be price action.

Admitting you are wrong is the important step so that you can then change gears and capitalize on what the market is actually doing, instead of what you want it to do.

Mike

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  #5 (permalink)
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Big Mike View Post
One of the easiest things to do that I recommend is identifying points in the market (price, price action) where you would be wrong about your "bias".

If you think the market is trending higher, at what point would you think that is no longer the case, or admit you were wrong? It may be price, it may be price action.

Admitting you are wrong is the important step so that you can then change gears and capitalize on what the market is actually doing, instead of what you want it to do.

Mike

This is a good idea and one I can do before market opens.....just looked at some charts, at least the ones I had trouble with recently and doing so would have avoided the worst of my bias issues......I can do this...will report.

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  #6 (permalink)
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Thanks all for the good information. I'm glad I read this thread today. I'm having issues with biases. Got my rear-end handed to me in the am session. Can't wait till work is over to do my trade review..

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  #7 (permalink)
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PandaWarrior View Post
Seems my biggest problem now that I have some of the mechanical stuff worked out is this. Directional bias.

I often go into a session looking at a daily chart, or perhaps the overnight session and try to find the larger trend. I would prefer to be on that side of the trade so sometimes I get locked into a single directional bias and as you know, that's not always healthy intra day.

So the trouble is, I have trouble changing my bias if market conditions change. Not always, but sometimes and when I do, its really dangerous.

Has anyone experienced this and if so, what are some ways you have overcome it?

@PandaWarrior

I have directional bias after I have looked at pre-market information for set-ups. Most of the time I find it difficult to change the bias when I have started trading because I look at live data in relation to my setup bias. I no longer try to change my bias for the set up but I do have a behaviour point where I need to give up for the day. The behaviour point is three trades that are stopped out = I am fighting the flow and its best to come back tommorow and start afresh..

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  #8 (permalink)
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I don't know the specifics of your methodology but there may be instances on the higher time frame where instead of having a clear single directional bias the action morphs into mixed signals. It's those "in-between" areas where a trader can run into trouble because our brains can make justifications for either direction. It may be a matter of further clarifying or expanding your definition of bias. Mark Fisher's ACD method is one way I approach bias. There are some informative futures.io (formerly BMT) threads on the subject if you haven't perused them already.

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  #9 (permalink)
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ACD

I think you've seen MFB's Oil thread. Have you read the Logical Trader? The ACD system has really helped me respect the opening range (45 minutes) and helped me identify price levels to abandon my up or down bias heading into the day. I was surprised after reading that book at how oblivious I was to how often the opening range gives you the high or low of the day. Something as simple as drawing a box around the opening price can help you grow respect for that specific range and what it can represent. Hope that helps

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  #10 (permalink)
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Volume points the way


I also found I need to take my trades in the direction of the trend for the best results. I have a fairly active method that benefits from switching directions intraday. If I miss a trend change I'm more apt to get a stop out or a break even trade.

What has worked best for me is to follow volume. I look for the largest volume spike that is above the 10 day average volume for each 15 minute period. See the blue line in the volume pane on the chart. Since the chart is 5-minute period and the average is for 15-minute periods, you will notice that the level changes every 3 price bars.

You will have to find what that works for your method. I use a 5-minute chart for my trend definition. Here is Friday's 5-minute chart. Only shows a couple fake-outs as Friday was a trend day in the ES by my definition.

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I also look at volume on the 1-minute chart, my trade entry chart. I feel that the higher volume spikes tend to occur in the direction the market is headed. Here is Friday's 1-minute chart, Note my annotations showing where the 1-minute chart volume was telling me to look for long entries.

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Hope this helps.

Trade Wise, Trade Well

John
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