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Trading Confirmation Bias – Part 2

What I talk about is nothing new or revolutionary. In fact, if you’ve taken the most basic of basic psychology courses in school, you’ve learned about the concept of confirmation bias. Given trading the markets is a huge mental game, confirmation bias can play many roles in holding you back from improving as a trader, and here we have a real life example of confirmation bias holding a trader back.

I’d highly recommend watching Part 1 of this series by clicking HERE

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Aah, good old confirmation bias,let's talk some more about it, part two.(whooshing)Before I go any further, this video will make the most sensein regards to confirmation bias if you watch the videothat we have a link to down below.So if you're watching this on the site,just down below the video.If you're watching us on YouTube,within description section.I would highly recommend watching that firstso you can kind of get the backgroundand the foundation of what confirmation bias is.But in a nutshell, confirmation biasis a support of some belief.And essentially you are just framing everything,you are just viewing everythingin a way that's going to fit whatever that belief is.Now if it's true or not, doesn't matter.It's just you gotta view thingsthat are gonna make that belief true.And that's what that video all kind of coversand I take a really extreme examplewhere a lot of people, not a lot of people,but some people out there,a little background, I do technical analysis chartsand then I'll do an analysis of 'em,make a video of it and I havea separate YouTube channel for that.But especially in the penny world,some people are like, "Whenever Clay does a chart,"it always goes down the next day."He's the kiss of death, he's a curse."Blah, blah, blah, all the stuff,but they're implying that some video chart has magicaland mystical powers that cause things to go down.And that is their belief,that it is gonna cause things to go down.So I'm gonna piggy back off that and maybe you're thinking,that sounds like the dumbest thing ever.What, do these people think you're some sortof stock God and that these video chartscan manipulate and control how a stock trades?Apparently, but that kind of also just showshow crazy the human mind can get in order to blame anybodybut this true source of the problemwhich is the person in the mirror.Instead of blaming themselves, like I was wrong,they wanna blame anything else,no matter how crazy it getsand I admit this is extreme thought, but it can happen.Which just shows that if it can get that extreme,imagine all the nooks and crannieswhere potentially you could havesome conformation bias in your trading.But, in this example here,I'm gonna go through a little discussion,but I wanna just kind of notethat what confirmation bias here is that,let's keep,I wanna make sure I spell it right,there we go, on the word original.And original what?Well, just an original idea.But the key word here is being original.So let's go through this little exchangeand I'll kinda continue to update this.Again, I wish I would say I was making this stuff up,but this is from a message board."I don't believe Clay's charts."I believe Clay destroyed the stock."End of story."This stock was sailing along until he arrived."Nothing good has happened since he arrived."And that's it."Yeah, I know, kinda crazy, but what's the original idea?Well, nothing good ever happens after I arrive,meaning after I've put up a video chart.That's kinda the idea, nothing good happensand I destroyed the stock and yes, on this particular day,it was the following day and that the price was going down.So yeah, he, in his little view,his belief is being supported.His belief is that nothing ever good happensand see, look, the price is dropping right nowever since he showed up.But, is that really the truth?Is that really the case?Let's keep on going.So I reply back and I quote him on this part,"Nothing good has happened since he arrived."So I go, 'cause I'm trying to help him outand make him aware of this confirmation biasand I say an absolute perfect example of confirmation bias."Nothing good has happened?"Really, you sure about that?My first video was on 6/22 and, uh, that was long beforethe price skyrocketed up and then I list the proof thereand I link them to the video that I did on the day beforethe price actually made a really, really, really nice move.Let's get things updated, so now there's been,counterproof, we'll call it.And this counterproof has been made to the original idea.So some sort of original idea is proposed,is made, some belief is demonstrated,and now I have given literally counterproofof well, that's not true, because I did a video on this dateand if you go back in the history,you would see that the price actuallymade a really nice move which doesn't fitinto the original criteria.So let's keep on going.So they reply back, "When I say that, I'm talking about"after you showed up, when we were over a penny."I know you post charts when the price is low,"that's just your way of diverting the attention"from when you actually call your cronies"in to do their thing after a nice run up."You never do anything shady when the price is down."You always wait until the big gains come in."Do you see what happened?Do you see confirmation bias at work?What do they do to my counterproof?Re-define.What do they re-define?Well, they re-defined the idea.No, no, no, that's not what I meant.I meant, when it's below a penny, you don't do it.It's only when it's above a penny.Wait a second, that's not?You see what happened, now all of a sudden,they're re-defining their idea so that it what?Now it fits back into?Well, see it's right, it's still right.And then of course, you see where this is going,I could go and find an example wherethere's something below a penny and I do itand the price still, I could find easily an examplethat is counterproof, but then what are they gonna do?They're gonna re-define and re-defineand re-define in order to continue to fitto get conformation of whatever this idea is.So be very, very aware of that.Like I said, if you watched the first partof confirmation bias that's one way it acts,but this is definitely kind ofa way that you can check yourself.If you find yourself continually re-definingwhat some sort of original premise,what sort of original idea you had about something isin order to make it still work for you,that's probably a sign of confirmation bias.And this doesn't make you some sort of freak show.I mean, confirmation bias, if you take psychology 101,I mean, you'll learn about it.It's a very basic psychology,it's very basic in the human mind,so there's not anything grand going on here,instead of wow, this is like ground breaking stuff.No, nothing like that.This is a very well known topic in psychologyand psychology has a lot to do with trading.So just another example of confirmation biasand something that you need to be very aware of.So just be honest with yourself as you go about,whether it's forming a strategy,or really kind of anywhere in life,if this whole re-define keeps showing up,keeps showing up, you probably have some confirmation biasoccurring in whatever situation it pertains to.If you are out there trading a loan currentlyand maybe are in the market looking for a community to join,to assist you in your trading or to just help you,give you another set of eyeballs,then I do have a private trading communitywhere you can trade alongside meand other experienced traders.So what you see popping up on the screen right nowis both an information link,so if you click on the inner circle one,that is going to take you to the pagewhere I explain all the detailsof what exactly come with the community,both the chatroom and the newsletter.And then the other image that has popped upis a behind-the-scenes tour where you can see exactlywhat is going to be contained within the community.I take you through, like I said, a behind-the-scenes tourof everything and that way you'll know preciselywhat you are getting when you join.So definitely check that stuff out if you are interestedand thinking about wanting to join a communityand let me know if you have any questions.

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How to Kill Your Stress, Fear, and Frustration as a Trader