Confirmation bias: why we only find arguments in favour

Having made a decision, a person starts noticing what supports it and missing what contradicts it. The mechanism works invisibly and requires no bad faith.

What it looks like in markets

After buying a security, news about the company reads differently: the good is taken as confirmation, the bad as temporary or exaggerated.

The search for information becomes selective: you study opinions that agree with yours.

The opposing position is explained by the opponent's motives rather than by their arguments.

What helps

A refutation condition written in advance — A strategy without exit rules is not a strategy. It turns the search for contradicting facts into a mandatory part of the process.

An explicit search for the opposing case: find the strongest argument against your purchase and try to answer it.

Separating analysis from ownership: assess a security before buying, not after.

A particularly dangerous combination

Confirmation bias plus loss aversion. The first finds reasons to hold, the second prevents selling. The position lives for years, accumulating explanations.

A practical technique

Periodically reread your own notes on why you bought and answer honestly whether the reason still holds — A trading journal: why no learning happens without one.