Break Free from Confirmation Bias: Enhancing Your Trading Strategy

Hi, Brian McAvoy here. Today we're going to talk about, actually kind of a fun topic. It's dealing with a, an odd fear. But it's, like I said, it's actually kind of fun. It's conversation I enjoy having with people, especially day traders. I mean, if you're an intraday trader, I run across a lot of traders who run into this. And today we're going to be talking about confirmation bias where you just plain, you've got this nervousness about you where you want to have so much confirmation that you're not going to lose money on this trade, that you're right this time, that it's, it blows up way beyond reason. And here's where I'm talking about, it's why I like to say I like having a conversation. We started a long time ago, but I was working with this guy, he was a day trader and he was trading 1 minute and 5 minute charts, pretty fast trades. And he was only trained a few hours a day. So he was in and out of his trades really fast. But if you, when we took a look at his process and system, the first thing he did was he looked at the daily chart. So he's looking back over the last 90 days long period of time and then he would look at the four hour charts and then he'd look at the one hour charts and then he'd look at the 15 minute charts. He's looking for all this conflict. He's wanting everybody to line up and say, yes, we're gonna, we're going along today or we're going short. And it was hilarious because he, I mean, and it wasn't hilarious in one regard because yes, he was struggling with it. But the thing is, he's sitting there wanting confirmation that yes, if he thinks the market's going long, there's a lot of things telling him that he's right. And I said, dude, you're actually hurting yourself with this confirmation bias, whether it's looking at the daily charts or other information. But anyway, I said what you're doing when you look at the daily chart or even the four hour chart, I said you're looking over a very broad period of time. Let's say you're just looking over the four, four hour chart. You're looking over like maybe the last month. Well, the thing is, and here's the metaphor I like to use to get it across to you, it's like, dude, if your wife is, she's been in a good mood for the last 30 days, but she's mad at you today, you better pay attention to the fact that she's mad at you today because last 30 days don't count right now. And the thing is, when you're trading and you're in and out of your trade in a matter of minutes or hours, it doesn't matter. Really doesn't matter. What's been going on three weeks ago really doesn't. And even if the market has been trending up for the last 30 days, if today it's trending down and that's what everything's telling you, don't trade long. That's the thing and that's. See, this is where the confirmation bias and you're looking for that confirmation, this is where it actually can work against you. Because you're sitting there in your head. You look at the daily chart for our chart and it's like, oh yeah, market's going up, production, we should be going long. But if today the markets are going down, that's going to be floating around in your head and it's going to work against you. You're going to have an internal conflict when you're looking at charts and say, no, today we should be going short. And that's going to be unhelpful in helping you make good decisions. So what you need to do is take a look at as far as all the information that you're working with, whether it's charts or indicators or news or whatever, you got CNBC squawk box playing in the background, all that kind of stuff that's like, no, watch out for these things because if they're biasing you against what you're seeing on the charts or whatever other information that you're actually using to make your decisions, if you have these other things floating around that are biasing, you know, in contradiction to what you're using, it's working against you as a trader and it's going to trip you up and it's going to cause you to second guess yourself, make bad decisions, hesitate, that kind of stuff. So what you want to do is filter all this stuff out and if it's not really helpful, then eliminate it from what you're doing. Seriously, just plain eliminate it. And that's what we did with this guy that I was telling you about. I said, dude, stop looking at the daily chart, stop looking at the four hour chart. I said, a long trade for you is two hours at the most. You want to be looking at the one hour chart at the most, but otherwise you should only be looking at stuff that's going on right now because you're working in a three hour time window here. And it does. If the market's very bearish right now, in this three hour time window, you want to be trading short. Don't let this other stuff be floating around saying, no, you should be trading long. You should be trading long. No, don't do that to yourself. So now how do you learn how to do this? Well, as far as defining a process, what kind of information you're working with, all that kind of stuff, that's what I teach in the coaching that I do. I teach you how to really get clear on your process, make it a good, solid, consistent process. I mean, where I'm different from most everybody else is, I say don't focus on profit first. See, most traders get it backwards. Those traders get it backwards saying, I want consistent profits. But what they do is they say, I gotta find a profitable system strategy and then I'll figure out how to get consistent with it. It's like, no, we want to focus on the consistency first. Then we'll make, then we'll get you profitable. But we gotta have the consistency first. And so if you, if this makes sense to you, get consistent first, dial in your profits, then we'll wire your head for consistent execution. Cool. Then swingby insideouttrading.com we can have a talk about your situation, see if you know, my coaching might be helpful for you. And if not, I can point you in the right direction. If you got some other issue where you really need to be, talk to somebody else. Cool. I got a lot of good colleagues, been in the space for a long time. They're good people, they'll take good care of you and I can point you in the right direction. But don't just sit there and keep, you know, settling for subpar results. Don't stop settling for less money from your trading than you should. This is a real job. This is a real business. This is not just some hobby that you know because you have too much time on your hands and money to throw away. No, you're here to do this, be successful, make money at it and enjoy it. Right? So let's move you forward in that swingby Insideouttrading.com and book a call with me. At the top of the page there's a link. Book a call with Brian, click the link, pick a day in time, schedule a call with me. But let's have the conversation. Let's sort through what's going on, lay out a path to move you forward so that your trading gets better. Start making more money. Make it having more fun. This has been helpful. Give me a like and a subscribe down below. Share this with your friends. And again, I hope it's been helpful. We'll talk to you soon. Cheers.