Module 3 — Trading Biases and Judgement

Cognitive bias are not character flaws; it is the shortcut your brain takes when asked to decide quickly on incomplete or pressured information — which describes almost every trading decision you will make.
These can not only be damaging on a trade by trade basis, but left unchecked may be eat away at trading capital and destroy confidence.

The only way you can manage biases is through the important first stage through investigating of what they are, acknowledgement that they may be in play (i.e. owning them)t eliminate bias.
Only then can do is recognise the 'symptoms' that may be recurring in your own trading, and begin to build countermeasures to help your decisions. The aim is notnecessarily 'to be unbiased' but it is to know which way you lean, and design strategies around it.

Unit 15

An Introduction to Trading Biases

By the end of this unit you will:

Define the meaning of the term “trading bias” and understand its potential impact on trading results.
Gain clarity on the steps required to address these in your trading.

Unit 16

Confirmation Bias

By the end of this unit you will:

Consider, as we work through the different types of bias, whether any resonate with you as a trader.
Understand the background and behaviours associated with a confirmation bias.

Unit 17

Recency Bias

By the end of this unit you will:

Consider whether this bias resonates with you as a trader.
Understand the background and behaviours associated with recency bias.

Unit 18

Outcome Bias

By the end of this unit you will:

Consider whether this bias resonates with you as a trader.
Understand the background and behaviours associated with outcome bias.

Unit 19

Sunk-Cost Bias

By the end of this unit you will:

Consider whether this bias resonates with you as a trader.
Understand the background and behaviours associated with sunk cost bias.

Unit 20

Loss Aversion

By the end of this unit you will:

Review the types of cognitive trading biases and how they can impact on behaviour.
Consider whether this bias resonates with you as a trader.
Understand the background and behaviours associated with loss aversion.

Unit 21

Minimalisation

By the end of this unit you will:

Consider whether this bias resonates with you as a trader.
Understand the background and behaviours associated with minimalisation bias.

Unit 22

FOMO and the Fear of Missing the Move

By the end of this unit you will:

Recognise the specific conditions that trigger fear of missing out in your own trading.
Understand the relationship between FOMO and the entries you later regret.
Identify a defined response to use when a move runs without you.