The common terminal is connected to the positive supply. The diode polarity refers to the installation orientation of the two leads of a diode, with one being the anode (positive) and the other the cathode (negative). Laser diodes have several important characteristics that make them unique. In fact, both combinations are correct and may coexist in a. When the cathode terminal is connected to the negative terminal of the power source the diode will be able to conduct current and it is called forward bias.