🧠 Confirmation Bias: Your Worst Psychological Enemy 👹

Good morning, traders…

Several years ago, I made a bet on a college basketball team during March Madness.

Not because of their record or matchups. I just liked the coach. The guy gave great interviews. He was calm, confident, collected and said all the right things. He felt like a winner.

So I filled out my bracket, pushed them to the Final Four, and even laid out a little side bet.

Never mind their shooting percentage was shaky, their team chemistry was questionable, or that they struggled against zone defense…

I wanted them to win, so I found reasons to believe they would. I ignored the data, skipped the warnings, and let my emotions do the work.

SPOILER ALERT: They lost by 18 points in the first round.

Sound familiar?

I’m talking about a psychological phenomenon known as confirmation bias.

I see it all the time in trading. You buy a call, then scroll through charts, social media, and news sites, soaking up anything that says the stock is going higher.

You ignore the double top and the weak volume. You already made your bet. Now you just want the idea confirmed.

Confirmation bias is the silent killer of traders. If you don’t learn to avoid it, it’ll wreck your account just like it wrecked my March Madness bet.

Let Me Show You How To Spot Confirmation Bias In Your Trading (And Eliminate It Forever)…

The Dangers of Having Your Bias “Confirmed”

Confirmation bias causes you to seek out information that proves you right and ignore information that proves you wrong.

It feels safer. But it’s false safety.

It shows up in sneaky ways. You might skip past the data that doesn’t match your thesis. Or you only check the news from bullish sources. Or move your stop-loss lower because “this trade is different.”

You feel like you’re doing due diligence. But really, you’re just hearing what you want to hear.

When money’s on the line, our brains start filtering. We highlight bullish tweets. We ignore bearish comments. We cheer on upgrades. We rationalize downgrades.

All because we want to win. When, ironically, it leads to losses.

Trading demands honesty. With the chart, with your plan, and most importantly, with yourself.

To make matters worse, confirmation bias is exacerbated when we size up. The more we risk, the more we want the world to confirm we made the right call.

We cling to our original idea because the alternative (admitting we were wrong and taking a loss) is uncomfortable.

But if you’re only looking for reasons to hold your trade, you’re not being objective. You’re campaigning.

It’s like being the press secretary for your own position. It does much more harm than good.

3 Ways to Kill Confirmation Bias Before It Kills Your Trades

Here are three ways to eliminate confirmation bias from your mindset…

Take the Other Side

Before you enter a trade, argue the other side. Write it out. Say it out loud.

Make the bear case stronger than the bull case. This protects you from falling in love with your position.

If you can’t explain the downside risk, you don’t understand the trade.

And don’t cheat. Don’t make a straw man bear case just to knock it down.

Build the strongest possible argument against your idea. If your trade still holds up, then you’ve earned it.

Use “If/Then” Rules

Create “if/then” rules ahead of time.

“If the share price drops below $540, then I sell.”

Not “I’ll wait and see,” which really means, “I don’t want to admit I’m wrong.”

Make your rules mechanical. Not emotional. This forces your future self to act on logic, not pride.

Make rules for entries as well. “If IV is over 100%, I won’t enter.”

The more objective your entry is, the less likely you are to force a trade just because it feels

right.

“If/then rules” act like bumpers in a bowling lane. They keep you from drifting too far into danger just because the ball looked good out of your hand.

Ask Someone Who Disagrees

Find a trading peer who sees things differently from you.

Show them your setup. Ask what you’re missing.

If they’re observant (and honest), they’ll point out what you’re blind to.

Make sure it’s someone who’s not afraid to be blunt. You don’t want a cheerleader. You want a skeptic.

If you’re trading solo, use a checklist. Build in questions that challenge your idea. “What’s the worst-case scenario? What does the chart look like if I flip it upside down? What would make me change my mind today?”

Accountability is the antidote to confirmation bias. You’re here to see the evidence, weigh it, and make the best call based on what’s real.

Trade like a judge. Treat every setup like a witness. Let the facts speak louder than your feelings.

Happy trading,

Ben Sturgill

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