Biases

Biases are not eliminable—only labeled and process-hedged. Below: the ones I hit most in live trading.

1. Quick reference

Bias	How it shows up	Hedge
Overconfidence	Size up with little work	Mandatory one-page thesis + Feynman test
Confirmation	Read only supportive takes	Write three bear bullets
Anchoring	Fixate on cost basis	Forward thesis and valuation only
Disposition	Sell winners fast, hold losers	Sell checklist beats P&L
Loss aversion	Won’t admit wrong	Pre-write falsifiers
FOMO	Chase hot names	24h cool-off + cap
Recency	Extrapolate last month	Check 5–10y percentiles
Herding	“Everyone is buying”	Independent written reason

2. Emotion event protocol

When you feel you must act now:

1. Pause 24 hours (unless liquidity or hard falsifier)
2. Tag #emotion in Decision journal
3. Rerun buy/sell checklists
4. If still acting, halve planned size

3. After gains and losses

State	Danger	Instead
Big gain	Upgrade narrative, ignore price	Trim per plan; stress-test bull case
Big loss	Average down, hunt confirming news	Check falsifiers; cut to watch size
Flat boredom	Trade for action	No thesis change → no trade

4. Media and social

• Did one post/video change long-term allocation? If yes, delay; write three pro and three con bullets
• Cannot name primary source? No order
• Traded weekly on news? Try media diet next week

5. Quarterly bias audit

Check triggered biases (multi-select):

• Overconfidence
• Confirmation
• Disposition / loss aversion
• FOMO / recency
• Other: ________

Pick the top one; change one process next quarter (e.g. “all buys delayed 24h”)—not five at once.

6. Reading goal

Behavioral finance concepts (prospect theory, mental accounting, availability) should map to concrete hedges in the table—not new vocabulary only.