When trading, you will find it easy to develop a bias about the direction of the market. Some traders holding a position will try to find people or information which agrees with their opinion about the market. For example, a trader who is long may try to reinforce this opinion by looking for any kind of corroborating bullish information, and dismiss any contradictory bearish information. This process of searching for corroborating information and dismissing conflicting information is called reinforcement and selective perception. It is something that is very natural for humans to do. But it can be dangerous because a trader may block information which is important in making an intelligent decision about the market. Looking for a consensus to reinforce a decision is fraught with disaster in trading.

Other traders who wish to initiate a position or hold a position may look for reasons to not enter a market or get out of an existing position. For example, many traders may feel that as soon as they buy the market will automatically head lower, as if the market knows or cares what they are doing. Many traders feel the market is unfair to them and should treat them with more respect.

Some traders can be swayed by the opinions of analysts who may articulate persuasive arguments and flawless reasons for having a certain position in the market. The market is not a debating session where the most eloquent argument wins, but a fair arena where supply and demand are judged. The trader may simply have no rebuttal to the arguments except for the minor fact that the market does not agree with the analyst either. However, the market cannot be as easily convinced of any argument, unlike the trader. The trader must maintain a distance from others and realize the arguments of others may be irrefutable, but the market still does not have to agree and follow the logic.

Biased attitudes are unhealthy in trading because you need to maintain a clear perspective of the market. The better informed and less opinionated you are, the better the chance for a good decision when entering or exiting a position. Markets may change quickly; so it is wise to maintain a clear and unbiased view.