Have you noticed that once you go long, you ignore trend reversals and keep bullish, and when bearish, you only focus on bearish signals, ignoring bullish ones? This is 'confirmation bias' in trading. To put it simply, once you think it's going up and take a long position, all you see on the chart are bullish signals; a slight drop is seen as a normal pullback, and bearish news is ignored. The same goes for short positions.



I think it all comes from staring at the charts too long. The brain gets lazy about overturning its own judgment and doesn't want to admit being wrong, so you end up holding on without cutting losses, sinking deeper.

So I think you shouldn't stare at the charts obsessively. Over-watching only solidifies your thinking. Before placing a trade, write down what conditions would prove you wrong and require a reversal. Try to avoid being too subjective and cherry-picking signals.
Personally, I still enjoy studying behavioral finance.
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Orange-FlavoredColdWallet
· 07-04 05:03
Indeed, staring at the screen obsessively can lead to getting caught up in details. Setting stop-loss conditions in advance is much better than toughing it out afterwards. The cognitive bias theories from behavioral finance are very common in trading.
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