How traders systematically blow themselves up

Tendency to rely heavily on the first piece of information encountered (the anchor) when making subsequent decisions. Common in price targets and entry levels.

Tendency to seek information that confirms existing positions and dismiss information that contradicts them. The most common cognitive bias in trading.

Tendency to sell winners too early (lock in gains) and hold losers too long (avoid realizing losses). Documented by Shefrin and Statman; one of the most robust behavioral findings.

Fear Of Missing Out - buying because others are profiting.

'I knew it all along' — the tendency to remember past predictions as more accurate than they were. Distorts strategy review and confidence calibration.

Psychological asymmetry: losses are felt ~2x more strongly than equivalent gains. Foundational concept of Prospect Theory (Kahneman & Tversky, 1979).

The idea that contagious stories drive markets, not just fundamentals.

Taking more trades than the system requires — either to capture FOMO setups, to recover losses, or because trading feels productive. Erodes edge through cost and bad entries.

Mass selling driven by fear, often at the worst possible time.

Overweighting recent events when forming expectations. Causes traders to chase recent winners and avoid recent losers — usually wrong.

When market prices feed back into the underlying fundamentals they're supposed to reflect.

Entering new trades primarily to recover from prior losses rather than because the setup is valid. Specific form of tilt.

Holding losing positions because of money already lost rather than forward-looking analysis. 'I've held this through a 30% drawdown; I'll wait for it to come back.'

Emotionally-impaired trading state where the trader makes decisions based on prior outcomes (anger, frustration, FOMO) rather than the trading plan.