Confirmation Bias

Confirmation bias is the tendency to notice and favor information that supports a belief you already hold, while brushing off anything that contradicts it. A trader long a stock tends to focus on the good news and downplay the bad; a trader short the same stock, reading the same headlines, does the opposite. It's especially risky while a position is still open and a real decision — hold, add, or exit — is still on the table, since only noticing confirming evidence means you've stopped evaluating the trade honestly. Deliberately seeking out the strongest argument against your position, and checking new information against your original written reasons for the trade rather than a general feeling, are common ways traders catch it before it does damage.