Atlas of Cognitive Biases #22 · Information and beliefs. The evidence is gone, the belief remains
What it looks like in trading
“this market is in an uptrend” despite value moving lower and lower
sticking with a method whose results have been poor for months
being immune to arguments from your own journal
An example from a session
For a week the trader has been waiting for an “inevitable” bounce, even though value moves lower every day (profile atlas #12). The original reason no longer exists, but the belief remains.
What the research says
Ross, Lepper and Hubbard (1975) gave participants false feedback about their abilities and then told them it had been made up. Even so, participants went on rating their abilities in line with the false feedback. Lord, Ross and Lepper (1979): the same evidence strengthened opposite beliefs in people with different views.
Holding on to a belief even after the evidence it rested on has been discredited. Once built, an explanation takes on a life of its own.
How does belief perseverance show up in trading?
Typical signs: “this market is in an uptrend” despite value moving lower and lower; sticking with a method whose results have been poor for months; being immune to arguments from your own journal.
Educational content, not psychological advice or an investment recommendation.