Trade without bias

“No data yet!….It is a capital mistake to theorise before you have all the evidence, it biases the judgement.”                            Sherlock Holmes

We’ve previously touched on an issue that: doctors, engineers, solicitors etc. may have when they try to trade – and I was no exception.

For a long time, we have, through good professional habit, been comfortable predicting the way based on our experience, sound judgement and assumptions.

In technical trading, however, such attributes do not help. Having a preconceived idea of what the market will do blinds us to reading the market at the moment. Or, as Arthur Conan Doyle wrote, “it biases the judgement”.

We have previously considered (from Joshua Foer) that a grandmaster chess player does not look several moves ahead, as we all assume, but instead is coldly reacting, more or less, to the opposition pieces presented at that moment.

A form of trading, which I like a lot, is what I call “probability” trading; Best on a single market and timeframe. Always-in provides the dual meaning of direction of trade and committing to a trade direction wherever possible.

Whenever we are confident of an always-in trade direction, then we are to do everything we can to enter the trade.

In a neutral, or 50/50, chart of probability the trader waits. With a defined probability of some likelihood, a trader enters the trade.

Okay, there is more to it than that and why ‘always-in’ is a method, I think, for the experienced trader only – but bizarrely all beginners seem to start out with this or a similar methodology.

To do the same in my previous career, it would be like joining the Red Arrows before completing flying training.

 

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