Hindsight Bias

Hindsight bias — sometimes called the ‘I knew it all along’ effect — is the tendency to see a past market move as having been obvious once the outcome is known. On a completed chart the breakout looks clean and the reversal looks inevitable, because everything to the right of the decision point is already visible. This distorts trade reviews in two directions: sound decisions that lost money look careless, and reckless decisions that happened to win look skilful. The standard defense is to review trades against the information that existed at the time — the screenshot taken before the entry, the reasoning written in the journal, the levels marked in advance — so the review measures the decision rather than replaying a chart whose ending is already known.