Outcome Bias

Judging a decision by its result rather than by the quality of the process.

1 min

Why it matters

Outcome bias trains you into repeating bad behavior when it gets lucky.

Operational use: this is how the market taxes urgency. When it appears, slow down or size down.

Common trap

Thinking a winning trade proves the decision was good.

Example

Moving a stop impulsively and winning, then repeating the behavior until it kills you.

Operational cue: if you can’t point to it on the chart, in the DOM, or in your broker logs, treat it as a story and trade smaller.

Notes

Grade trades at entry against a plan.

If you see this repeatedly, you are in a different regime than your model assumes.
Regime change usually means position size change.
When in doubt: trade smaller, or don’t trade.