The Blind Spot Bias: The Number #1 Bias You Should Improve in Trading

Trading is a mind game.

As a trader, eventually we will come to realize that there is so much more in trading than technical analysis, price action, indicators. No doubt that the human brain can be the biggest strength in trading. However, at the same time, it can also be the biggest weakness for traders. We are all victims of behavioral biases, which naturally lead us to certain decisions or actions that are oftentimes destructive to our trading performance.?

While there are many biases that can explain a large share of traders' decisions, there is one behavioral bias that is standing out.?You guessed it right based on the title; The Blind Spot Bias!?In the process of working on your own psychological strengths as a trader, it is impossible to neglect this bias, as you can only move forward when you are aware and fully accepting the existence of this bias.?

Before we deep-dive into the definition of Blind Spot Bias and how it might affect our trading, we would like to share one thing about trading biases which believed to be extremely important, comforting, but also challenging all at the same time:?

No one is free from behavioral biases. In other words, we all inherently have behavioral biases. It is completely normal to have behavioral biases and that doesn’t define us in any way. We are not necessarily better or worse because we have a specific bias. Convincing ourselves to be completely rational and not being affected by any bias is rather pointless. Because otherwise, we are subject to the suffering impact, especially in trading. Many behavioral biases come naturally which sometimes could be the result of millions of years of evolution.?

And here comes the twist: understanding your tendency to fall into certain biases and being aware of it is extremely powerful. In fact, awareness is?the first step to combat any psychological biases. Open to acknowledge your cognitive bias, understand how it impacted your behavior, and actively seeking a way to minimize the negative impact is more efficient than denying its existence. The Blind Spot Bias is a perfect example on how denying the existence of cognitive bias could lead to an even greater harm.?So, let’s dig-in what The Blind Spot Bias is means.?

The Blind Spot Bias: What is it??

The Blind Spot Bias is the tendency of thinking that we are less prone to cognitive biases than the people around us. While we believe that cognitive biases exist and happen to other people, the same is less likely to happen to ourselves. As the name already suggests, we tend to have a blind spot on ourselves when judging behavioral biases.?

Biases by definition are unconscious. The blind spot bias is formed by an introspective illusion, thereby leading people to believe that they are more rational and less biased compared to others. We will not dive deeper into the psychological aspect of it all. In this article specifically, we will only be focusing on how this bias affects traders.?

How does the Blind Spot Bias affect traders??

If a trader does not acknowledge and is willing to accept the fact that they unconsciously possess the tendency of falling into biases which leads to a certain decision making in trading, the trader will miss the chance to work on their bias. These will result in them allowing those destructive patterns coming from those cognitive biases to continue negatively impact their trading performance. There are?several?known behavioral biases and fallacies which are likely to have a strong impact on the traders’ behavior such as the gambler’s fallacy, anchoring, conservatism bias, house money effect, overconfidence bias, recency bias, and conjunction fallacy just to name a few. But the?Blind Spot Bias is really your entry point?to even start working on all of those.?

As a result, the Blind Spot Bias should be?the Number #1 bias you want to look into as a trader?before looking at any of the other biases out there. There’s a high chance that if you as a trader think that none of those biases apply to you, you are victim of the blind spot bias. Oftentimes,?we assume that our thoughts seem to be rational as we are the decision maker with the understanding that we are fully comprehending the context?on how the decision is made. It’s also easier to assume that we are more rational than other people as we have little to no context on the thought process of others. However, none of that is a valid indicator to determine which party is more likely to possess certain cognitive behavior bias. As bias could appear unconsciously, both parties have an equal chance to be prone to cognitive bias. ?

How to minimize the damage of blind spot bias in trading performance??

It is highly encouraged for you as a trader to consider the existence of the blind spot bias. Always keep an open mind of your own potential biases and willing to actively work on it as a way to strengthen your trading psychology. Luckily for us traders, we can utilize pattern detection technology on our trading data to identify the potential bias that might occur with Hoc-trade. ?

Hoc-trade powered with cutting-edge technology of AI to assist traders find the correlation between trading behaviors of thousands of traders and the statistical significance to your trading performance. Blind spot bias isn’t necessarily included in one of the 40-identified by Hoc-trade because blind spot bias simply means denying the existence of cognitive bias within oneself.

As having awareness is the very step to combat the detrimental effect of cognitive bias, having the blind spot can get in a way for traders to improve their trading performance and making more rational decision. Hence, we crowned this bias as the number one bias to look at. ?

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Once you have gotten the blind spot bias out of the way, you are ready to embrace improvement and make a more informed decision. Connect your trading account with Hoc-trade to guard your trading gains from your cognitive biases. Just enter your trading ID on a read-only access?and your trading is protected from detrimental effect of biases within second! Currently compatible with Metatrader 4 and Metatrader 5. It’s a secure and compliant process. No personal identifier will be collected. ?

Thank you for reading, happy trading, and stay safe!?

Note: This article is not intended as financial advice. ?