Every Single trader has cognitive biases

Every Single trader (no matter how successful) has cognitive biases that subtly hold them back from reaching their full potential.

These are the 7 deadly cognitive biases that every trader looking to maximize their performance needs to be aware of.

1. Confirmation bias, which is the tendency to seek out information that confirms our existing beliefs and ignore evidence to the contrary. Overconfidence in their trades and a failure to see potential risks.

2. The sunk cost fallacy is another cognitive bias that can hold us back, as it causes us to stay committed to losing trades in an effort to recoup our losses.

3. Loss aversion is another bias that can negatively impact our trading, as it causes us to feel the pain of losses more acutely than the pleasure of gains, leading to overly cautious trades.

4. The availability heuristic is a bias that can lead us to overestimate the likelihood of an event based on how easily it comes to mind, rather than on objective data.

5. Herd mentality is another bias that can hold traders back, as the fear of missing out can cause us to follow the crowd, rather than rely on our own analysis.

6. Anchoring bias is the tendency to rely too heavily on the first piece of information we receive, even if it is not relevant or accurate. leading to incorrect assumptions and trades.

7. Halo effect: This bias can cause traders to perceive a company or asset as strong in all areas, based on its performance in one area, which may not be an accurate reflection of its overall value or potential risks.

Andrew Aziz

@BearBullTraders

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