787

[Symmetrick]

65г6

[crwth]

I have listened to a podcast regarding these different types of Biases and effects. You could see these different effects being applied everywhere, like Anchoring. It's being used in prices of items in markets, stores, and anywhere that there is a sign of the actual product price. When the time comes, giving a "SALE" sign and making it look like it has a big discount, but in reality, there is still a margin with that discount rate for the seller.

I'm probably most affected by the Loss Aversion Bias. It makes me feel like I'm not taking the right risks and seem to be making bad decisions, not just in trading but in my life. Lol. I don't know if I'm unlucky or not, but I feel that way.

[1miau]

I don't know if that really is a bias but for my impression it is somehow similar:

Regional / National Bias

When a certain project (altcoin) is launched in your region / country, I see many people are acting biased and it's much more likely that they'll buy even if the conditions are very bad. We had this in 2017 when many (shitty) altcoin ICO projects were launched in Germany and nobody really cared that their ideas were extremely flawed.
I can only guess why people bought it but most likely a large part was bias:
- they are people from my country, I like them...
- I can understand what they say in my language...
- In our country, fails / scams won't happen...

All of these projects failed ofcourse. 

[mrob82]

I would add one more to the the list that is relevant to investing, especially BTC.  Recency Bias.  You hear it all of the time, BTC just did X - it must do it again immediately.  Options traders deal with this on a daily basis, that why most of them get completely slaughtered.

Recency bias occurs when investors put an emphasis on recent events and give less weight to those that have happened in the past. It skews perception toward short-term thinking. During a bull market, investors' appetite for risk is generally increased as they extrapolate recent gains into the future. Since stocks have been moving higher as of late, investors are more likely to believe that stocks will continue to appreciate in value.
However, the same holds true in the depths of a bear market.

Pretty good stuff in the Links Below:

https://www.fool.com/investing/2019/12/23/avoid-these-3-common-biases-when-making-investment.aspx
https://www.personalcapital.com/blog/investing-markets/how-to-avoid-recency-bias/

[hd49728]

Anchoring Bias

Investors often subconsciously become attached to some conditional price, for example, the price at which they bought an asset. This distorts their decision-making process, since the purchase price of the instrument does not affect its true value in any way. Often, an investor continues to own an unprofitable asset for an unreasonably long time expecting that it will win back losses and return to the “anchored” price.

In the context of investing, one consequence of anchoring is that market participants with an anchoring bias tend to hold investments that have lost value because they have anchored their fair value estimate to the original price rather than to fundamentals. As a result, market participants assume greater risk by holding the investment in the hope the security will return to its purchase price. Market participants are often aware that their anchor is imperfect and attempt to make adjustments to reflect subsequent information and analysis. However, these adjustments often produce outcomes that reflect the bias of the original anchors.

They are bad HODLers. They don't cut loss by their bad awareness on support, resistance, cutloss and anchoring bias prevent them to do cut-loss practice. If they cut loss and have patience to wait till a next good dip to buy back, they will have good entry to enjoy bounce back and retrieve somewhat amount for their loss. Do it a few times and they can get all their loss back, get their original capital back. They don't have to HODL, wait for price back to anchoring price.

Wait for climb back to anchoring price (also strong resistance) is hopeless and takes very long time or might never happen.

[Findingnemo]

Just now I learnt the correct term to call Warren Buffet and which phobia he is actually in. Thanks for the guide which is really informative eve though I know this subject just now learnt the appropriate terms for them with much more clear explanation.

[Filicius]

Wow, very interesting! I am aware of my weaknesses towards trading, in a more intuitive manner if we can say that, but this top 7 mistakes with their explanation makes it more down to earth.

Once I saw in a documentary something about loss aversion bias, that I can recall, but the most important for me, after reading the text, is the anchoring, concept that I didn't know and where I think I have a little problem

[zasad@]

I've been trying to change triggers lately.
For example, if I really really want to sell coins, I start to consider buying it, and vice versa.
For example, I wanted to sell Ethereum many times for $ 600, but now I only invest in it every week.
This strategy has already helped me to earn money, because my first desires are usually wrong.

[hatshepsut93]

Endowment Effect

Everything is simple here. An asset that we own seems to us to be much more valuable than those that we do not own. In especially difficult cases, ALL assets other than the one owned by the investor are perceived by him as a "scam". Distortion is widespread among maximalists.

Bitcoin maximalism doesn't come from some emotional attachment to investment, if you look at prominent Bitcoin maximalist, almost all of them are people with good technical knowledge and many years of experience in crypto. They have seen countless scams, countless projects with big promises that flopped, countless "bitcoin killers" that now trade at 1 satoshi. Altcoins only go up in the long term because their USD value is tied to Bitcoin. If Bitcoin was removed from the equation, they would be just a more volatile and risky version of penny stocks.

[libert19]

On affinity bias, I try to keep my investments to myself, this way it helps me to avoid clouded by other people's judgements,  people love to give their opinions on whatever they hear (see, I'm also giving my opinion on this thread, lol), I think it's just better way to keep your things to oneself.

Anyway, lovely article!

[Baskeyairdrop]

In this article, we'll talk about the 7 most popular psychological investing mistakes. Not many can withstand the market swing. Maneuvering in an environment where fortunes are won and lost every day is no easy task. The situation is complicated by our own brain, which resists making rational decisions and in every possible way tries to substitute us. You can't trust anyone in the market ... Especially yourself. To help investors better understand their behavioral misconceptions and work around them, consider all of these mistakes. I have collected articles on each item, which you can read in more detail, here is a summary of these errors.


Anchoring Bias

Investors often subconsciously become attached to some conditional price, for example, the price at which they bought an asset. This distorts their decision-making process, since the purchase price of the instrument does not affect its true value in any way. Often, an investor continues to own an unprofitable asset for an unreasonably long time expecting that it will win back losses and return to the “anchored” price.

In the context of investing, one consequence of anchoring is that market participants with an anchoring bias tend to hold investments that have lost value because they have anchored their fair value estimate to the original price rather than to fundamentals. As a result, market participants assume greater risk by holding the investment in the hope the security will return to its purchase price. Market participants are often aware that their anchor is imperfect and attempt to make adjustments to reflect subsequent information and analysis. However, these adjustments often produce outcomes that reflect the bias of the original anchors.

Materials on this theme:

- Anchoring Investopedia
- Anchoring bias
- Anchoring Bias Affects How You Invest
- Behavioral Biases of Individual Investors: The Effect of Anchoring

I fall into this category of investment and now I see that it doesn't pay at all. This article has a lot of good in it which I must digest to help me invest better.