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Psychology

Confirmation bias

Intermediate

Noticing only the evidence that agrees with the trade you already want to take.

What it means

Write down what would prove your bias wrong before the session, and look for it honestly.

In practice

Once a trader has a view, the mind starts collecting support for it. Bullish signals look significant, bearish ones get explained away, and the trade feels more certain than the evidence justifies.

The defence is to argue the other side on purpose. Before entering, write the case against the trade and name the price at which the idea is wrong. A stop at that price turns the answer into an order.

What to watch for

It is strongest after the trade is open, when money is at stake. Searching for opinions that agree with a losing position is the usual sign, and it is how a small loss gets held into a large one.

Entrix Academy

Learn these terms step by step, one lesson free

Entrix Academy is the trading course inside EntrixAlgo. It teaches the ideas in this glossary with interactive lessons, practice and a final exam. It is part of Pro, and a free account opens one lesson of your choice.

  • 129 lessons, start anywhere
  • Practice on every lesson
  • Final exam and certificate