Atlas of Cognitive Biases #64 · People and ego. You fit the facts to the decision
What it looks like in trading
justifying breaking the plan (“the market was unusual”)
holding a position against the data so as not to admit a mistake
downplaying information that undermines your scenario
An example from a session
A trader broke the plan and lost. Instead of recording it in the journal, they convince themselves that “the plan was bad”. Next time they break it again. The need to be right: Mental workshop #11.
What the research says
Leon Festinger (1957) described the theory of cognitive dissonance. Festinger and Carlsmith (1959): people paid $1 to lie that a boring task was interesting later genuinely rated it as more interesting than people paid $20. The small reward didn't justify the lie, so they changed their belief.
The tension we feel when our actions contradict our beliefs or the facts contradict our decision. We often reduce it by changing how we interpret the facts rather than changing the decision.
How does cognitive dissonance show up in trading?
Typical signs: justifying breaking the plan (“the market was unusual”); holding a position against the data so as not to admit a mistake; downplaying information that undermines your scenario.
Educational content, not psychological advice or an investment recommendation.