your most expensive trading mistake will not be technical, but psychological.

These are the biases that have ruined countless traders.

Avoid them at all costs:

1. Price bias

Traders get fixated on price, which can distort their decisions.

- If Trader A joined crypto when Bitcoin was $52,000, $61,000 BTC will seem expensive to them.

- If Trader B joined crypto when Bitcoin was $71,000, $61,000 BTC will seem cheap to them.

2. Memory bias

This is the tendency to remember the most recent information best and give it more weight.

Traders can carry information from their most recent trades into their next trade, which can lead to overconfidence and losses.

3. Loss Aversion

Traders feel losses more than they feel gains.

The pain of losing $100 can be greater than the joy of making $100.

This bias can cause winners to be cut off early due to fear that those gains will turn into losses.

4. Ownership Effect

When traders own an asset, they tend to overvalue it.

This emotional attachment makes it difficult to sell at a loss or at a fair price because they base the future price of the asset on their expectations rather than on market facts.

5. Herd Mentality

Following the crowd or always going against it can be risky.

Instead, stick to your plan and don’t react impulsively to the crowd’s opinion.

Only consider the crowd when conducting an objective analysis of market sentiment.

6. Availability heuristic

Traders over-trust the most emotionally charged or recent information.

For example, a recent market crash may make a trader overly cautious, even though market conditions have changed.

7. Survivorship bias

Systematically overestimating the chances of success.

The world shows us success stories, while failures are usually forgotten.

8. Mood

The way information is presented affects decision making.

A trader’s mood and self-confidence can affect how they assess risks.

A positive mood can lead to underestimating risks, while a negative mood can lead to overestimating them.

9. Confirmation bias

Traders look for data that confirms their beliefs.

If you are bullish on an asset, you will seek out any information that confirms your bullish view and ignore any data that is bearish.

10. Obviousness

The tendency to perceive past events as obvious.

After an event has occurred, traders often feel as if they had predicted it from the start.

This bias can lead to overconfidence in future predictions and unrealistic expectations about their trading abilities.

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