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Psychology

Confirmation Bias

By Jarosław Wasiński • Published: • Updated:
A tendency to select and interpret information in ways favouring an existing belief. In trading it can encourage ignoring invalidation conditions or reading only supportive analysis. A pre-decision thesis, counterargument and consistent evidence criteria can help. Updating a view after new information is not itself an error.
Example. Before entering long, you record invalidation at an H1 close below 1.1000. Once it occurs, you read only comments predicting a rebound and remove the earlier note. This illustrates selecting confirmations; the later price outcome does not change the process breach.

Information before and after entry

Confirmation bias can concern source selection, chart interpretation and memory. The same news may receive considerable weight when it fits a thesis and be ignored when it challenges it. Not every opposing opinion is correct; evidence quality and consistent assessment criteria matter more than simply collecting contrary views.

Record a falsification condition

Before deciding, state the supporting argument, strongest counterargument and observation that would alter the assessment. After entry, evaluate both sides using the same rules. A justified update after new information differs from finding an excuse to breach a stop or exposure limit. Record changes rather than silently rewriting the original thesis.

Review contemporaneous records

Compare the pre-trade note with later interpretation. Look for deleted contrary information, changing definitions and selection of only successful examples. A single event does not establish someone’s character. A procedure can constrain selective interpretation but guarantees neither a correct scenario nor freedom from errors.

FAQ

Must every opposing comment be accepted?
No. Assess its quality, relevance and timing under your thesis’s criteria.
Is changing a view after entry always a mistake?
No. It can be a justified update based on new information and the plan.

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Jarosław Wasiński

Editor-in-chief, ForexMechanics.com • Macro & FX analyst

Independent analyst and practitioner with over 20 years of experience in financial markets. Actively involved in Forex since 2007, with a focus on fundamental analysis, OTC market structure, and disciplined capital risk management.

  • Creator and editor-in-chief of MyBank.pl, providing reliable financial education since 2004.
  • Author of hundreds of in-depth market commentaries, structural analyses, and educational materials for traders and investors.
  • Advocate for market transparency, promoting education grounded in hard data and institutional reports (BIS, ESMA, CFTC).

All content is educational and informational only – it does not constitute investment advice or a recommendation. Remember: leveraged trading (Forex/CFD) carries a high risk of rapid capital loss.