- Confirmation bias: Confirmation bias is a cognitive psychology mistake that occurs when traders only look for information that confirms their existing beliefs and ignore information that contradicts them. This can lead to traders making poor decisions, as they are not taking into account all of the relevant information.
- Anchoring bias: Anchoring bias is a cognitive psychology mistake that occurs when traders rely too heavily on the first piece of information they receive and fail to consider other possibilities. This can lead to traders making poor decisions, as they are not fully exploring all of the options available to them.
Both of these mistakes can be overcome by being aware of them and actively working to avoid them. This can include seeking out diverse sources of information, considering alternative perspectives, and questioning one’s own assumptions. Additionally, using tools such as checklists and decision-making frameworks can help to mitigate the effects of these biases.