For Business

Trading Psychology

What Is Confirmation Bias in Trading

Confirmation bias is reading the screen for agreement with a belief formed before looking, so that the fact which agrees is taken into the argument and the fact which does not is left on the screen. This paper shows you two true facts on one gold chart, the close above its 50-day average and an RSI at its highest of the year, on 8 October 2025; the idea as cherry picking, a tree of two colours and a basket of one; both facts on the daily bars; the belief as a sieve that lets one colour through; and the Navigator list on your platform, where both facts sit two clicks apart.

Difficulty
Beginner
Reading time
5 min
Pages
8
Reviewed by
Saman Rahbar

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Two facts on one screen

Confirmation bias is a belief formed before looking, and a screen read for agreement with it. On 8 October 2025 gold closed at 4040.93, above its 50-day average of 3565.85 — the average of the last fifty closes, drawn as a line — and its RSI over 14 days, a gauge from 0 to 100 of how hard the price has been pushed one way, read 87.2, the highest reading of the year so far. Both facts are true and both are on the same screen. A trader who decided beforehand that gold is going up takes the first into the argument and leaves the second on the screen. A trader who decided the opposite does the reverse. The bias is the sorting, not the belief.

Cherry picking

Picture a cherry tree with red fruit and yellow fruit on the same branches, and a basket beneath it holding red ones only. Nobody lied about the tree. The picker went up with a colour in mind and came down with a basket that agrees with it, and anyone shown the basket would conclude the tree was red. That is the whole mechanism. The belief is the picker, the screen is the tree with both kinds of fruit on it, and the argument the trader ends up with is the basket. It looks like evidence. It is a selection, and the person who made it is the last to see that.

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