Biases That KILL Your Trading

“Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so.”
Douglas Adams

Confirmatory Bias

Confirmatory bias is the tendency to give greater weighting to information that supports our pet theories and beliefs, while minimizing disconfirming information. People have a natural tendency to filter information in a way that favors their preferred views. Many a failed business venture can be linked with the way in which the proprietor neglected unsupported information about prospects and overly inflated data favoring the venture.

Causality Bias

Causality bias is the natural human tendency to view the world as an organized, patterned environment where everything occurs for a reason. This perceptual quality is often extended into areas where such principles do not apply. The best example of this is gambling. Gamblers are very good at perceiving patterns and cause-effect relationships where there are no such processes operating. This bias can result in misjudgment of risks and the development of flawed spending & investment strategies.

Group Think Bias

Group think bias is where individuals in an organization overvalue particular ideas and decisions because of peer support. For example, a CEO may have a particular view and staff eager to facilitate career advancement may distort their own evaluation of the proposal to fit in with what they perceive the boss expects.

Losing traders have these biases. They are key reasons why trend followers win. As long as people fall prey to these biases, there will be opportunity to win their trading losses and profit in the great zero sum game.

Feedback from Clients and Visitors

“Absolutely spot on. Great site, and great to see some honest people working in finance – what a refreshing rarity you are.”
Financial Advisor
Standard Life

“I found that your site combined with the book was so full of helpful instruction and information that I never had to ask for extra support. I’d been trading for a few years using technical analysis and was getting nowhere. Your easy K.I.S.S. approach with trend following and risk management has not only kept me from big losses, it has given me bigger gains. I’m actually making money, spending much less time looking at charts, and having fun!”
TurtleTrader Student

“Just wanted to say thank you…I am now beating all the averages, have happy clients and have employees who finally have a methodology that we believe in. Thanks. Your site is great.”
TurtleTrader Student

“Hello, I have been on your site for the last two days straight. It’s like a great novel I can’t seem to put down! Awesome site. I will definitely be e-mailing future thoughts and comments as I continue through the site. Thanks for a great site, and the dedication you have made to cutting through all the BS and making the information available the way you do!”
Financial Advisor
Raymond James Financial Services, Inc.

“The design of this system is really elegant and thoughtful. I’m a computer systems builder by trade, and to me, good systems are the ones that are really focused. Good systems try to keep things as simple as possible to keep the user concentrating his efforts in doing a few very effective things very well. They have a tremendous amount of smart thought behind them, and much of this effort goes into eliminating useless background noise (which in trend followers’ case would be fundamental analysis). It’s kind of like watching a skilled professional athlete — they make it look so easy but that’s because of the discipline and thousands of hours of sweat they put into the work.”
Thanks! Derek

“Holy smokes guys, this is the first site I have come across that thinks like I do. You seem to tell it like it is, guaranteed there will be winners and losers, period. I work in the energy sector and have always positioned futures and options from a hedger’s perspective but deep down I have always had an interest in market efficiencies and how to profit from it without getting greedy and stupid. There is no sicker feeling than to get popped in the marketplace. Every web site out there seems to have a deal or no-brainer. This web site seems to be the first that I have come across that mentions that you have to be smart and you have to work, there are no shortcuts.”
Thanks, Jeff T.

“Greetings, I must express my sincere appreciation for TurtleTrader. The amount of trading misinformation prevalent on the web and in the media can really hurt an individual trader. Your site manages to dispel a lot of trading myths as well as educate traders at the same time.”
Thanks for your time, Grant S.

Trend Following Products

Review trend following systems and training:

Michael Covel Trend Following Products
Michael Covel Trend Following Products

More info here.