Outcome bias

A decision taken under uncertainty can be right and lose, or wrong and win, because the result is produced jointly by the decision and by everything the decider did not control. Outcome bias collapses the two into one, so a record reviewed after the fact quietly becomes a commentary on recent results rather than an assessment of conduct.

The separation that undoes it is documentary. A process error is a fact about conduct: a size larger than the sizing rule permitted, a level moved after the position was open, an aggregate limit exceeded. It is established by comparing two documents, and it is entirely independent of how the position turned out. Sorting a set of records by conduct and by result at once produces four groups rather than two, and the two mixed groups, sound decisions that lost and unsound ones that won, are the ones the bias erases.

The only defence available is a record written before the result exists, which is why the pre trade half of a trading journal carries the weight and is also the half practitioners describe as harder to maintain. A note written afterwards cannot establish what was believed beforehand, however honestly it is written.