Thinking Through Ups and Downs: Anchoring Bias and Sunk Cost Fallacy
2025-06-06
Main Takeaways
This is the third installment of Thinking Through Ups and Downs – a blog series that explores the psychological patterns that influence trading behavior.
Anchoring bias causes traders to cling to arbitrary price points while sunk cost fallacy leads them to staying in losing positions, making exiting a bad trade challenging.
To stay objective, define your exit before entering a trade, use stop-losses, track your decisions with a trade journal, and ask questions like: Would I still buy this today?
