Most people always have some kind of "hobby", that is, bias in the process of investment analysis and judgment. When analysts make analytical judgments with obvious bias, their analysis results will often deviate greatly from reality, or even be completely opposite. In the process of investment analysis and judgment, the following bias factors generally appear:

1. Representation bias is also called the "law of representation", which means that people assume that if something can represent another thing when, in fact, it is what it is supposed to represent. For example, consider the technical concepts supporting price levels on a chart. Initially, analysts found that once the price fell to a certain point on the chart, it seemed to rebound. Therefore, at this position, a large number of buyers seem to be willing to buy, thus "supporting" the futures price level. Unfortunately, many people treat terms like "support" and "resistance" as real phenomena rather than as simple concepts that represent correlations that people have discovered in the past. When people judge something, they tend to use "what it looks like" rather than "what its probability is." This phenomenon is a bias in appearance. 2. Reliability Bias A related bias to the representation bias is the bias to believe that our data are reliable, that is, they really are what they should be. Many investors often cite large amounts of data in fundamental analysis to demonstrate and support their views. Because they believe the data is real and reliable. But a question worth discussing is that the data is historical data and will still change in the future. The data will still change in the future. Therefore, if you believe that these data are very reliable and rely too much on them, it may lead to errors that seriously deviate from the accuracy of the analysis. 3. Lottery bias Lottery bias refers to the confidence people feel when manipulating data in some way, as if manipulating these data can in some sense allow them to control the market. Assuming that you have accepted the daily chart as a way to represent the market, then you will definitely either trade on the daily chart or manipulate the data in some way until you feel confident enough to trade. Of course, these data manipulations themselves will give you a boost in confidence. This bias is so powerful that people often fail to get the information they need to succeed in the market. Instead, they get what they want to hear. After all, people generally give people who pay money what they want rather than what they really need. 4. Bias of the law of small numbers The law of small numbers says that you don’t need many such cases before you can draw a conclusion. For example, after a few days of narrow range oscillation there is a big jump in price, and that's when we enter the market. We don't look at numbers neutrally, that is, when the human eye scans a chart. Not all data points are given equal weight. Instead, people focus on certain salient situations. And we tend to form opinions based on these particular circumstances. It's human nature to pick out the very successful examples of an approach and ignore the daily losses that can crush your bones. Therefore, even a very careful reading of a diagram can easily lead researchers to believe that a system is much better than it actually is. Scientific research has found that this bias does exist. Even very careful researchers tend to bias their results in the direction they assume. That's why scientists have double-blind testing. In this kind of test, the experimenters do not know which group is the experimental group and which group is the control group until the end of the experiment. 5. Conservatism Bias Once we have the concept of trading in our minds, conservatism bias will prevail: we do not recognize or even see some signs of opposition. It is easy to see those few with extremely obvious movements. effective examples, but avoid or ignore those that are ineffective. Most people completely ignore those opposing signs unless in fact the signs are overwhelming. However, after losing 7 or 8 times in a row, they suddenly become concerned about the effectiveness of their trading system and are never sure how much loss may occur. Therefore, many people are not neutral relative to the market and cannot follow the crowd; instead, they are often looking for situations they expect to see. 6. Random Bias First, people tend to assume that markets are random and prices tend to move with random odds. Second, if such randomness does exist, people often make incorrect assumptions about what it might mean. One reason people like to pick highs and lows is that they believe the market can and will rebound at any time. They basically believe that the market is random. In fact, there are many academic researchers who still firmly hold the belief that the market is random. However, is this assumption correct? Even if this assumption is correct, can one trade such a market? The market may have some random characteristics, but that doesn't mean it is random. Just because something "looks" random doesn't mean it "is" random. This type of data is not like market data, because the distribution of prices in the market has a large tail that cannot be predicted using normally distributed prices. Why? When you look at market data, the volatility of the sample becomes larger and larger as you keep adding more data. Even if the market is said to be random, people fail to understand what random means.

When a long-term move does occur in a random sequence, it is thought not to be random. They developed theories suggesting that it was something other than a long-term series in a random sequence, a tendency that stems from our natural tendency to view everything in the world as predictable and understandable. One consequence of this randomness bias, as well as lottery bias, is that people tend to pick highs and lows. We want to be "right" and have control over the market, reflecting our thoughts on the market, resulting in the belief that we can pick the highest highs and the lowest lows. Such situations rarely arise in the life of a trader and investor, and those who attempt to do so are doomed to experience many failures. 7. Understand the Need for Bias Most people are still constructing some complex theories about what exactly is going on in the market. Many media are always trying their best to explain the market to people, even if they themselves know nothing about the market. This is understanding the need for bias. We try to understand the rules of the market and find reasons for everything. This attempt to find rules hinders people's ability to follow the flow of the market, because we see what we want to see, not what is actually happening. These biased factors are the root cause of errors in our analysis and judgment. Only by overcoming the interference of these biased factors can we achieve better investment results.