Confirmation Bias

Confirmation bias is the tendency to notice, seek out, and give more weight to information that supports a belief you already hold, while overlooking or dismissing information that contradicts it. In trading, this shows up as a systematic tilt toward whatever confirms a position already held: a trader who's long a stock tends to emphasize good news and downplay bad news about it, while a trader short the same stock, reading the identical news, does the reverse. It's especially dangerous while a position is still open and a genuine decision — hold, add, or exit — is still available, since a trader who only notices confirming evidence has effectively stopped evaluating the position honestly. Deliberately seeking out the strongest argument against a position before making a decision, and checking new information against the original written reasons for a trade rather than a general feeling, are common ways traders try to catch confirmation bias as it happens, since it rarely feels like bias from the inside.