DEFINITION
Anchoring Bias
A cognitive bias where traders rely too heavily on the first price they saw or the entry price of a trade, preventing rational decision-making on exits. Common cause of holding losers too long.
In depth
Anchoring shows up most when a trader refuses to exit a losing position because price hasn't returned to their entry. The entry price has no predictive value about future price — only current setup, stop, and target matter — but the brain anchors to it as a "fair" exit point.
Example
You buy EUR/USD at 1.0850. Price drops to 1.0820 against your stop. You move the stop down because "it just needs to come back to my entry." That's anchoring.
Related terms
Confirmation Bias
Seeking out information that confirms existing beliefs about a trade while ignoring contradictory evidence. A leading cause of holding losers and ignoring exit signals.
Disposition Effect
The tendency to sell winners too early and hold losers too long. One of the most documented behavioral biases in retail trading.
Loss Aversion
The psychological tendency to weigh losses as roughly twice as painful as equivalent gains. Causes traders to hold losers and exit winners prematurely.
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