Nobody ever knows exactly what’s going to happen in the markets…
We use repeatable patterns and experience to help us make informed decisions.
But not every pattern plays out…
And we can have biases and intrusive thoughts that can steer us away from some of the best opportunities.
That’s what happened to me last Friday…
I missed out on the potential for an 85% move because of a biased opinion and putting too much emphasis on one criterion…
Here’s what you can learn from my mistake and my number one tip to help you reduce biases in your trading…
How to Reduce Bias in Your Trading
NextPlay Technologies, Inc. (NASDAQ: NXTP) started running two weeks ago after being pumped on socials.
And after a few days of pullback, it was gapping up on Friday morning.
The one bias that got in my way of a potentially good trade in it, was I didn’t think it had the juice to squeeze…
The cost to borrow shares was 39 cents each — I just didn’t think anyone would pay that.
And without short sellers, the potential for a stock to spike goes down.
But what I didn’t account for was that the stock was already full of shorts from the prior few days…
And they were eager to get out into a pullback after that big morning gap-up probably caught them off guard.
So my bias cost me a trade opportunity.
But here’s what you can learn from it and how you can reduce bias in your trade ideas…
NXTP was on Oracle on Friday morning. And it had an entry signal at $2.05…
And that’s precisely where the stock started to squeeze…
NXTP chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
It reminds me a lot of the Polished.com Inc. (AMEX: POL) chart from last Wednesday…
When the stock had a late morning dip and rip and squeezed from the Oracle signal of $2.37 to $10.75.
POL chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
So the lesson here is to use the Oracle signals — the algorithm doesn’t have biases.
As long as you have a risk level and goal to take profits, you can use the Oracle signals as your entry.
See Oracle in action in our live training sessions here.
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade