“Market Anchoring” is a classic condition of irrational behaviour which can cost traders dearly. It describes our tendency to become “stuck” on a particular reference mark for making judgements and stock decisions The best traders, the winners, are ironically the best losers; those who can capture a small loss in order to avoid it becoming a huge loss. Losing investors can’t admit they’re incorrect by taking a loss when it is still small. This ensures that they end up taking huge losses and cements them as losing investors.
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April 9, 2011
Losing Trading Mentality – Market Anchoring "I Only Lose When I Sell"
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