STAGE 5 · LESSON 2 OF 5

Confirmation bias and selective evidence

People naturally favor observations that support beliefs they already hold.

THE IDEA~8–12 MINUTES

Understand it

A trader convinced the market will rise can ignore conflicting price action or unfavorable news. Research can suffer the same problem: testing only successful timeframes, excluding losing sessions or reporting only the winning variants. A useful countermeasure is a pretrade disconfirmation question: What evidence would make the setup invalid? During research, preserve rejected hypotheses and negative results.

WORKED EXAMPLE

If your long thesis requires a higher low, specify where it fails before entry. Afterwards, do not reinterpret every violation as 'still bullish' without retesting a different rule.

Watch for this misconception

Treating disagreement or losing evidence as proof that the market is temporarily wrong.

PRACTICE EXERCISE

Write two observations that would cause you not to take a favorite setup.

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KNOWLEDGE CHECK

Why record failed experiments?

Select the best answer

Check the sources

Hypothetical educational examples. Verify current product specifications and rules before making decisions.