Directional Bias Explained - Thread

1. What is DB?
- explicit expectation of a direction in the market
- probability enhancer; longs superior success rate in bullish DB, shorts superior success rate in bearish DB
- helps improve target selection & trade management (confluent with DB)

2. Constant vs. Situational DB
Constant DB = trading system virtually always offers a
directional preference (deriving price from moving average)
Situational DB = ts only offers a directional bias under specific circumstances (price decisively closes below a daily support)

3. Affect of DB on Trade Selection & Trade Management
- long when DB bullish; short when DB bearish
- disallow all trades against DB unless there are extremely unusual circumstances (sig. news, tremendous R:R)
- helps silence intraday noise
- adjust TP when DB is strong

4. Affect of DB II
A. Target should be derived from high time frame charts (not intraday)
B. Intraday trouble areas (ITA) still useful for trade management (adjusting stop loss etc.)
C. ITA anticipated to fail as DB unfolds
D. broken ITA provides excellent compounding opp.