What’s your bias??

In these market conditions, almost everone has a bias about the markets. Some are bullish and some are bearish, but if you asked them if they will bet their money on it, they will shake their head and say  ‘No way, market’s too crazy’.  I look at the markets with a neutral bias, atleast when I start my day and watch for the price action to guide me what’s going to happen on that particualr day, mainly because I am a small time retail trader, looking for market inefficiency to trade.  The conclusion of my bias is usually to see if that particular day is with the trend of the bigger picture i.e  yearly, monthly, weekly and based on that I take my trades and determine the size of the position I will take. I always like to trade with ‘TREND’ which is my friend.

What can bias do to you?

I have seen traders who become investors, on the flip of a coin, why because everyone who wants to make quick cash and bought a particular stock based on his friend’s recommendations, TV shows or newspapers buys the stock with a bias that everything is great about the stock and he is going to make money right off the bat. What happens next is a common story, the stock goes down and down and the trader buys more and more. At the end of the day or week, the trader who was looking for QUICK gains is now like a deer in front of a speeding car. He doesn’t know what went wrong, cause he didn’t buy it on his own analysis in the first place and now he’s stuck in a stock which has gone down and he doesn’t know anything about and eventually he becomes an investor and makes up his mind, that eventually it’s gonna come up and becomes from a trader to an investor. The transition is usually so fast that even the trader doesn’t know what happened. One typical example is RIMM:  People who were trying to buy 52 week low are still buying it at 52 week low.

I would highly recommend people not to have any bias about a particular investment or market. Always have an open mind. The reason being for every bullish analyst, there is a bearish analyst and vice-versa. If you have worked so hard for your money, why let some ABC or XYZ tell you what the market’s are going to do (exception: the people your taking recommendation from actually have a transparent history you can cross check their calls on).  Any kind of investor or trader needs to have a risk-reward strategy, afterall investing is about a game of probabilities, nobody can be right all the time, but make sure when you are your right in a big way and if your wrong, it’s only for a short period.

I want to make it loud and clear, markets are here to take your money off you. If your not upto the game, don’t dabble your feet into it , cause trust me, it has crushed some of the most intelligent people out there and you are a no big deal for it.


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