It is one thing to show a man that he is in an error, and another to put him in possession of truth...John Locke
Cognitive biases describe the way you think - the operative words here being cognitive (thinking) and biases (prejudices). You tend to hold on to your biases, even when they don’t serve you well.
This causes you to make trading mistake after trading mistake. Also, since your brain is hard-wired for biases, it is difficult to change them without experiencing some type of internal discomfort.
Resistance to change and acting out of biases have two effects on your trading and investing: You do the same thing over and over again, and you expect different results every time you do it. This is - as you are aware - Albert Einstein’s definition of insanity.
In order to push through the biases that are holding you back from becoming a profitable trader and investor, you must be aware of them and make appropriate changes. How do you make changes? You retrain your trading brain. This is done through consistent coaching and practice. It takes time, but it is completely doable—and it works!
The human brain uses biases to protect against assaults on your self-esteem. The self-attribution bias describes the tendency for good outcomes to be attributed to skill and bad outcomes to be attributed to just plain hideous bad luck.
A decision matrix for self-attribution bias looks something like this:
