Most traders review their trades the way most people assess their own driving — they conclude they are above average, their mistakes were situational, and their successes were the product of skill. The journal becomes a document that confirms what the trader already believes rather than one that reveals what is actually happening.
This is not a character flaw. It is a structural problem. A review process that produces biased conclusions does so because it is designed, usually unintentionally, to allow bias in. The trader reviews outcomes rather than decisions. They remember what happened differently from how it actually occurred. They apply different standards of scrutiny to winning trades and losing trades. They focus on the trades that stand out rather than on the statistical patterns that only appear across a large sample. Each of these tendencies has a predictable direction, and that direction is always toward flattering the trader’s self-image at the expense of accurate diagnosis.
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