{"id":19041,"date":"2023-09-26T12:19:06","date_gmt":"2023-09-26T20:19:06","guid":{"rendered":"https:\/\/www.cannontrading.com\/tools\/support-resistance-levels\/?p=19041"},"modified":"2023-09-26T12:19:06","modified_gmt":"2023-09-26T20:19:06","slug":"understanding-psychological-biases-at-work-that-can-affect-your-trading-plan-levels-for-sept-27th","status":"publish","type":"post","link":"https:\/\/www.cannontrading.com\/tools\/support-resistance-levels\/understanding-psychological-biases-at-work-that-can-affect-your-trading-plan-levels-for-sept-27th\/","title":{"rendered":"Understanding psychological biases at work that can affect your trading plan + Levels for Sept. 27th"},"content":{"rendered":"<div align=\"center\">\n<div align=\"justify\">\n<div><span style=\"text-align: left;\">Get Real Time updates and more on our private FB group!<\/span><\/div>\n<div>\n<div align=\"justify\">\n<div style=\"text-align: center;\" align=\"justify\">\n<div style=\"text-align: left;\" align=\"center\"><a href=\"http:\/\/r20.rs6.net\/tn.jsp?f=001KRg6On04gjknOfysn89cEhkyXgAxXigZc1_AdekBblRz4Cwp2yofkpGH8rpms9Q30D0wjhFS1q8yG11pQf1KRy2bpIyH4uwMgzWcI-wb74TdqgA-DQitbpTeoWmib8qwdH8ve86kM_6EWihst10TitotvFRrtw2C0HgnNGJLkXUXb6ec7AaQGNxU6EuLQxHI&amp;c=&amp;ch=\" target=\"_blank\" rel=\"noopener noreferrer\">https:\/\/business.facebook.com\/groups\/1105191589938254\/<\/a><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div><\/div>\n<div><\/div>\n<div>\n<p align=\"center\">\n<\/div>\n<div>\n<h3>Understanding psychological biases at work that can affect your trading plan<\/h3>\n<p><em>List generated by\u00a0 By\u00a0John Thorpe,\u00a0Senior Broker<\/em><\/p>\n<p>Technical analysis is not a flawless science, and it is susceptible to various biases that can impact trading decisions and performance. Recognizing and addressing these biases is essential for becoming a more disciplined and successful trader.<\/p>\n<p>Here are some common technical analysis biases and strategies to avoid or overcome them:<\/p>\n<ul>\n<li><strong>Confirmation Bias<\/strong>:\n<ul>\n<li class=\"indent-1\"><strong>Bias:<\/strong>\u00a0This occurs when traders only seek or give importance to information that confirms their existing beliefs or positions.<\/li>\n<li class=\"indent-1\"><strong>Avoidance Strategy:<\/strong>\u00a0Actively seek out information and technical signals that might contradict your initial analysis. Be open to changing your view based on objective data rather than personal bias.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Overfitting Bias:<\/strong>\n<ul>\n<li class=\"indent-1\"><strong>Bias:<\/strong>\u00a0Overfitting happens when traders use too many technical indicators, parameters, or complex strategies to fit historical data perfectly, but these strategies may not perform well in future markets.<\/li>\n<li class=\"indent-1\"><strong>Avoidance Strategy:<\/strong>\u00a0Keep your technical analysis simple and use a limited number of well-established indicators and patterns. Focus on robust strategies that have demonstrated reliability over time.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Recency Bias:<\/strong>\n<ul>\n<li class=\"indent-1\"><strong>Bias:<\/strong>\u00a0Traders tend to give more importance to recent price movements and patterns, assuming they will continue, while ignoring longer-term trends or historical context.<\/li>\n<li class=\"indent-1\"><strong>Avoidance Strategy:<\/strong>\u00a0Consider a longer time horizon and look at historical price data to gain perspective. Avoid making impulsive decisions based solely on recent price action.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Anchoring Bias:<\/strong>\n<ul>\n<li class=\"indent-1\"><strong>Bias:<\/strong>\u00a0This bias occurs when traders fixate on a specific price level or a reference point, often the entry price, and refuse to adjust their positions or exit strategies accordingly.<\/li>\n<li class=\"indent-1\"><strong>Avoidance Strategy:<\/strong>\u00a0Regularly reassess your positions and set stop-loss and take-profit levels based on current market conditions rather than anchoring to an arbitrary point.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Availability Bias:<\/strong>\n<ul>\n<li class=\"indent-1\"><strong>Bias:<\/strong>\u00a0Traders might rely too heavily on readily available information or recent news, leading to biased analysis and decision-making.<\/li>\n<li class=\"indent-1\"><strong>Avoidance Strategy:<\/strong>\u00a0Seek a variety of information sources and avoid making hasty decisions based solely on the latest news. Maintain a broader perspective on market fundamentals.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Gambler&#8217;s Fallacy:<\/strong>\n<ul>\n<li class=\"indent-1\"><strong>Bias:<\/strong>\u00a0Traders may believe that past events, like a series of losses, increase the likelihood of future events, such as a win, even though markets are not governed by probability in the same way as games of chance.<\/li>\n<li class=\"indent-1\"><strong>Avoidance Strategy:<\/strong>\u00a0Trade based on sound technical and fundamental analysis rather than expecting a change in luck. Each trade should be evaluated independently.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Emotional Bias:<\/strong>\n<ul>\n<li class=\"indent-1\"><strong>Bias:<\/strong>\u00a0Emotional responses, such as fear and greed, can cloud judgment and lead to impulsive decisions.<\/li>\n<li class=\"indent-1\"><strong>Avoidance Strategy:<\/strong>\u00a0Develop a trading plan with predefined entry and exit points, risk tolerance, and position sizing. Stick to your plan and avoid letting emotions drive your actions.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Hindsight Bias:<\/strong>\n<ul>\n<li class=\"indent-1\"><strong>Bias:<\/strong>\u00a0After a trade has concluded, traders may believe they knew the outcome all along, leading to overconfidence in their abilities.<\/li>\n<li class=\"indent-1\"><strong>Avoidance Strategy:\u00a0<\/strong>Keep a trading journal to record your analysis, decisions, and outcomes. This will help you learn from your experiences and avoid hindsight bias.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Self-Attribution Bias:<\/strong>\n<ul>\n<li class=\"indent-1\"><strong>Bias:<\/strong>\u00a0Traders may attribute successful trades to their skill and unsuccessful trades to external factors or bad luck.<\/li>\n<li class=\"indent-1\"><strong>Avoidance Strategy:<\/strong>\u00a0Be honest with yourself about your strengths and weaknesses as a trader. Analyze both winning and losing trades to identify areas for improvement.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Anxiety Bias:<\/strong>\n<ul>\n<li class=\"indent-1\"><strong>Bias:<\/strong>\u00a0Anxiety can lead to hesitation or overtrading, causing traders to miss opportunities or make impulsive decisions.<\/li>\n<li class=\"indent-1\"><strong>Avoidance Strategy:<\/strong>\u00a0Implement stress-reduction techniques, maintain discipline, and stick to a well-defined trading plan to mitigate anxiety-related biases.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Being aware of these biases is the first step toward becoming a more rational and disciplined trader. It&#8217;s also beneficial to continuously educate yourself, practice risk management, and seek feedback from mentors or peers to improve your trading skills and reduce the impact of these biases on your performance.<\/p>\n<p>&nbsp;<\/p>\n<\/div>\n<div align=\"justify\"><\/div>\n<div align=\"justify\"><a href=\"https:\/\/www.cannontrading.com\/Trading-Competition\"><img decoding=\"async\" src=\"https:\/\/files.constantcontact.com\/3dc00ef7001\/14f6b449-93aa-4907-bb12-38845d380e39.jpg\" alt=\"\" title=\"\"><\/a><\/div>\n<p>&nbsp;<\/p>\n<p style=\"text-align: left;\">Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors.\u00a0 You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.<\/p>\n<h3><a href=\"https:\/\/secure.ironbeam.com\/openaccount\/index.aspx?src=316&amp;k=27817434\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter\" src=\"https:\/\/files.constantcontact.com\/3dc00ef7001\/3b644da2-2bee-4d39-8d98-5208a20bec39.jpg\" width=\"258\" height=\"58\" alt=\"\" title=\"\"><\/a><\/h3>\n<h3><strong>Futures Trading Levels<\/strong><\/h3>\n<p>09-27-2023<\/p>\n<figure style=\"width: 573px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/files.constantcontact.com\/3dc00ef7001\/9cb5b893-465e-4327-bbb4-530eaa59ce96.png\" alt=\"#ES, #NQ, #YM, #RTY, #XBT, #GC, #SI, #CL, #ZB, #6E, #ZC, #ZW, #ZS, #ZM, #NG\" width=\"573\" height=\"710\" title=\"\"><figcaption class=\"wp-caption-text\">#ES, #NQ, #YM, #RTY, #XBT, #GC, #SI, #CL, #ZB, #6E, #ZC, #ZW, #ZS, #ZM, #NG<\/figcaption><\/figure>\n<p><a href=\"https:\/\/www.cannontrading.com\/services\/traders-profile\"><img decoding=\"async\" src=\"https:\/\/files.constantcontact.com\/3dc00ef7001\/d40a3398-72e5-4a59-836b-1bb9a30cc6da.png\" alt=\"\" title=\"\"><\/a><\/p>\n<p>&nbsp;<\/p>\n<h2 style=\"text-align: left;\" align=\"center\">Improve Your Trading Skills<\/h2>\n<div style=\"text-align: left;\" align=\"center\">Get access to proprietary indicators and trading methods,\u00a0<a href=\"https:\/\/www.cannontrading.com\/services\/traders-profile\" target=\"_blank\" rel=\"noopener noreferrer\">consult with an experienced broker<\/a><\/div>\n<div style=\"text-align: left;\" align=\"center\">\u00a01-800-454-9572\u00a0Explore trading methods.\u00a0<a href=\"https:\/\/www.cannontrading.com\/tools\/intraday-futures-trading-signals\" target=\"_blank\" rel=\"noopener noreferrer\">Register Here<\/a><\/div>\n<h3><a href=\"http:\/\/www.forexfactory.com\/\" target=\"_blank\" rel=\"noopener\"><br \/>\n<\/a><strong>Economic Reports, Source:\u00a0<\/strong><\/h3>\n<p><a href=\"http:\/\/Forexfactory.com\" target=\"_blank\" rel=\"noopener\">Forexfactory.com<\/a><\/p>\n<p><img decoding=\"async\" src=\"https:\/\/files.constantcontact.com\/3dc00ef7001\/078e9e53-8e6e-4841-9607-42b77413088e.png\" alt=\"\" title=\"\"><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: left;\">This is not a solicitation of any order to buy or sell, but a current market view provided by\u00a0<a href=\"https:\/\/www.cannontrading.com\/company\/about\">Cannon Trading Inc<\/a>. Any statement of facts\u00a0here in\u00a0contained are derived from sources believed to be\u00a0reliable,\u00a0but are not guaranteed as to\u00a0accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own\u00a0judgement\u00a0in trading.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Get Real Time updates and more on our private FB group! https:\/\/business.facebook.com\/groups\/1105191589938254\/ Understanding psychological biases at work that can affect your trading plan List generated by\u00a0 By\u00a0John Thorpe,\u00a0Senior Broker Technical analysis is not a flawless science, and it is susceptible to various biases that can impact trading decisions and performance. Recognizing and addressing these biases [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[67,231,76,230,30,61,358,234],"tags":[1481,1480,1475,1471,1469,1467,1468,1474,1472,1477,1478,1476,1479,1470,1473,1172,1239,40,627,1277,36],"class_list":["post-19041","post","type-post","status-publish","format-standard","hentry","category-future-trading-news","category-commodity-brokers-2","category-commodity-trading-2","category-day-trading-2","category-futures-broker-2","category-futures-trading-2","category-futures-trading-education","category-trading-guide","tag-cbot","tag-comex","tag-commoditiesmarket","tag-commoditiestrader","tag-commoditytrading","tag-crudeoil","tag-daytrader","tag-futuresmarket","tag-futurestrader","tag-kcbt","tag-mgex","tag-nymex","tag-smfe","tag-stockindices","tag-swingtrader","tag-cme","tag-commodities","tag-daytrading","tag-futures","tag-globex","tag-gold"],"_links":{"self":[{"href":"https:\/\/www.cannontrading.com\/tools\/support-resistance-levels\/wp-json\/wp\/v2\/posts\/19041","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cannontrading.com\/tools\/support-resistance-levels\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cannontrading.com\/tools\/support-resistance-levels\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cannontrading.com\/tools\/support-resistance-levels\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cannontrading.com\/tools\/support-resistance-levels\/wp-json\/wp\/v2\/comments?post=19041"}],"version-history":[{"count":1,"href":"https:\/\/www.cannontrading.com\/tools\/support-resistance-levels\/wp-json\/wp\/v2\/posts\/19041\/revisions"}],"predecessor-version":[{"id":19042,"href":"https:\/\/www.cannontrading.com\/tools\/support-resistance-levels\/wp-json\/wp\/v2\/posts\/19041\/revisions\/19042"}],"wp:attachment":[{"href":"https:\/\/www.cannontrading.com\/tools\/support-resistance-levels\/wp-json\/wp\/v2\/media?parent=19041"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cannontrading.com\/tools\/support-resistance-levels\/wp-json\/wp\/v2\/categories?post=19041"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cannontrading.com\/tools\/support-resistance-levels\/wp-json\/wp\/v2\/tags?post=19041"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}