Trading Psychology7 min read

Cognitive Biases in Trading: 7 Mental Traps to Avoid

Your brain works against you in trading. Learn the 7 cognitive biases that destroy accounts. Sunk cost, recency and the seven biases that blow up accounts.

The 7 Biases

  • Confirmation bias: Seek confirming evidence, ignore contradicting
  • Anchoring: First number seen becomes the reference
  • Loss aversion: Losses hurt 2x more than wins feel good
  • Recency bias: Recent trades weigh too heavily
  • Overconfidence: Winners get cocky, risk more
  • Hindsight bias: 'I knew it' (you didn't)
  • Sunk cost: Holding losers because you've already lost

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