Thursday, August 17, 2006

Trading Direction Bias

Abandon your Bull bias, if any.

It is natural to have a tendency to be comfortable either on the Buy side or Sell side. That is, going long or short.
There is a danger here that if it becomes a habit it can lead to losses.

You make money if you are right with your directional call. It is observed that many traders make losses on days that the market goes in the direction that they are not comfortable with.
If your system is solid and you are following the correct risk management and money management technqiues and still noting that you are making losses, more often than not, the culprit is market direction.
Simply stop trading for a while. Wait for the trend to reverse (if it does happen) and only then start again.


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