🔍 Why does cognitive dissonance occur in traders? A neuro-financial perspective
💡 Understanding how the brain responds allows traders to anticipate their biases and work on self-observation processes. Only then can frustration be transformed into operational evolution.
Cognitive dissonance is not a coincidence — it has deep roots in the functioning of the trader's brain. When the outcome of a trade contradicts their expectations, a critical area of the limbic system is activated, responsible for protecting the ego and emotional stability.
🧠 At that moment:
- The limbic system responds as if faced with a threat.
- The prefrontal cortex, responsible for rational thinking, is temporarily inhibited.
- Defense mechanisms are triggered: denial, justification, evasion.
🎯 The brain prefers to justify the mistake rather than accept that a bad decision was made. This generates a false sense of control, blocking learning and repeating loss patterns.
Ohana
