Forex Trading Vs Predictions Biases

Forex Trading Vs Predictions Biases

What is the main difference between a prediction and a bias? More importantly, how can it affect your performance in forex trading?

Prediction refers to a forecast or waiting for a particular outcome. When you make a prediction on the forex , you make a call on how an economic report will run or how a currency pair will react.

Meanwhile, a bias is simply a penchant for an event that may be more likely to occur. Having a bias is to think that the dollar could have a bearish or bullish outlook depending on how U.S. economic data is revealed.

In forex trading , it is important to have prejudices, but traders are often warned against making strong predictions. When you make a prediction , it's like you turn off other possibilities other than what you expect to happen . When you take a business idea based solely on a prediction, you might hurt your pride if the market shows a different scenario to play out .

Bias , on the other hand, is always open for confirmation . You can have a bias at the beginning of the week on topics the previous contract and the action of dominant price, but you can leave this place to confirmation by future data . If your bias is proven false , you can just as easily switch sides and take the bias away without damaging your psyche.

Remember that the market does not care about your predictions. Even if you are proven wrong and hurt a losing trade , the market will continue to trade without looking back .

Instead , when you simply keep a bias , you are now an open mind and let the market dictate how you should trade and how you might be able to enjoy it. Having a bias is to be reactionary to anticipate price action .

Of course , it is normal to have some predictions as to how price action behaves like most analyzes , as technicals and fundamentals are oriented collection of scenarios that are more likely to occur. Remember, however, to spend an equal amount of time figuring out how you will manage your business reports or if the actual price action proves different from what you expected.

At the end of the day, it is important to keep an open mind and accept that anything is possible in the forex market. Of equal importance is the proper risk management to ensure that you do not lose your money when your bias proves false