In simple terms
Confirmation bias is the tendency to seek, remember, or give greater weight to information that supports an already preferred thesis. Contrary evidence may receive less attention even without a conscious choice.
In trading, it can appear when someone decides to be long first and then notices only support levels and bullish signals, while downplaying volume, invalidation conditions, or bearish scenarios.
How the term is used
The term describes how information is selected, not the outcome of the trade. A practical check is to write down at least one condition that would disprove the thesis before deciding, then seek one contrary source or data point. This makes the reasoning easier to test, but it does not guarantee a correct decision.
For the full definition, example, and operational checks, see Confirmation bias.
Limit
Agreeing with a thesis does not by itself prove that the bias is present. The label is not a psychological diagnosis, a buy/sell signal, or a market forecast.
Sources
- CFA Institute, The Behavioral Biases of Individuals — classifies confirmation bias among belief-perseverance biases and discusses possible checks.
- Rollwage et al., Confidence drives a neural confirmation bias (Nature Communications) — behavioral and MEG research on how high confidence altered the processing of later evidence in a perceptual task; it is not a trading study.