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Do this to Improve Your Trading Results “MARKET BIAS VS TRADING SIGNAL”

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Trading the Forex Market is always accompanied with Euphoria that comes in anticipation of making thousands of dollars within a short time; such assumptions are drawn from how simple it is when predicting the market by hindsight, most traders that feel this way end up losing. That’s what make the market very simple and yet complex.  

There are various factors that lead to repeated mistakes resulting to losses, which include trading Psychology, leveraging and many more.  One of the things I have discovered from my personal experience and that of other traders is a subject that is hardly discussed; I term “The State of Confusion”. The trading results when a trader cannot differentiate between trading Bias and Time of entry would lead to a State of Confusion; this feeling can be very frustrating. 


MARKET BIAS 

Most experienced traders always make plans for trading days ahead of time; this is where analysis comes in.  Example, Mr John “a trader” would always analyze the possible outcome of market movement for coming trading days during Weekends. On Monday Night, Mr. John analyses the chart to determine his Market Bias for Tuesday.  If his market bias for Tuesday is BULLISH, then he will be waiting patiently for certain conditions to be met before he pulls the trigger for only buy trades and this is what is referred to as the TRADING SIGNALS.

Market Bias of a trader for a pair is the anticipated direction for the day, week, month e.t.c.  It could be a BULLISH Bias, BEARISH Bias, BULLISH and BEARISH bias, and a NO Bias “when the trader has no bias, the best action is to avoid the pair until the direction is clear”. 


TRADING SIGNALS

Trading signals are Triggers to buy or sell a pair. These triggers are determined by parameters chosen by individual trader; trigger point varies for different traders. Example Mr John may wait for 2 ema crosses on 30 mins timeframe to determine his trigger point, while Mr Lukas “another trader” may decide to wait for a 4hr candle to close above a FIB level before taking his trigger.  Traders may have more than one strategy for trade trigger but it’s smart to ensure that each strategy has to be tested and proven to be working before applying to live trades. 

It is advised to have a Market Bias for the day, and then take your trading signals in direction of your bias. 


POSSIBLE ACTIONS FOR VARIOUS TRADING BIAS

1.  Bullish Bias: When you have a buy bias, it is expected to take buy signals. There are three possible actions if price goes in your anticipated direction and I advise not to take a trade if price goes against your bias.  

A. Take a buy trade in the direction of your bias only if there is trading signal.           

B. Don’t  Take a buy trade in the direction of your bias if there is no trading signal        

C. Don’t Take a buy trade if price is going opposite to your bias


2.  Bearish Bias: For the sell bias, it is not advised to look for buy signals; Trade in the direction of your anticipated direction.         

A. Take a sell trade in the direction of your bias only if there is trading Signal                  

B.  Don’t take a sell trade in the direction of your bias if there is no trading signal     

C.  Don’t Take a sell trade if price is going opposite to your bias


3.  Bullish and Bearing Bias: This is a situation where you have two possible directions in view. 

A. Take a sell or buy trade in the direction of your bias only if there is trading Signal         

B.  Don’t take a sell or buy trade in the direction of your bias if there is no trading signal 

C.  Don’t Take a sell or buy trade if price is not in the right Zone for sells or buys 


Trading Bias and trading signals are two important but distinct important features of trading the Forex market.  I hope and believe that the appropriate application of both ideas as stated above would help improve your approach to trading the market for better results. 


Disclaimer:  What I have shared above is not a financial or investment advice of any sort, it’s just for educational purposes only, whatever trading decision you make is at your own risk.

Edited 07 Jul 2021, 06:36

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Nice article. Planning your trade before entry is the most effective way to get consistency in trading.
So glad have usefull information like this.
this is a good information. love you to share it!
nice article. i can learn something new from this
Very good article, thank you!
Agree, test before live trading is very important.
Thanks

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