Psychology
Why traders break their own rules. These terms name the most common mental traps, from chasing moves to refusing to take a loss, and the practical habits that keep them from deciding your trades.
7
terms in this topic
0
with a chart or figure
7
taught in an Academy lesson
12
other topics
7 terms, A to Z
- 5beginner
- 2intermediate
- Confirmation biasNoticing only the evidence that agrees with the trade you already want to take.
- Disposition effectSelling winners too early and holding losers too long; it can turn a winning strategy into a losing one.
- FOMOThe urge to jump into a move that is running away, usually with a poor entry and too much size.
- Loss aversionFeeling a loss about twice as strongly as a gain of the same size (Kahneman and Tversky).
- OvertradingTaking too many trades, often low-quality ones; studies find the most active traders tend to earn the least.
- Revenge tradingTrading to win back a loss right away, usually bigger and sloppier; small losses become big ones.
- TiltA state where emotion has taken over your decisions; the only good trade on tilt is no trade.