The narrative fallacy: what story are you telling about your trading?

The mind turns random outcomes into stories: "I lost because the market hates me", "I won because I'm finally good". The stories feel explanatory and are mostly invented.

The narrative fallacy: what story are you telling about your trading? — drawdown and recovery diagram
An equity curve during a drawdown and its recovery

What's your story?

  • the narrative you tell about your results
  • what it's protecting
  • what the data actually says
The narrative fallacy: what story are you telling about your trading? — risk-reward diagram
A risk-reward ratio of 1 to 2

The journal guide replaces narrative with record.

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