The Narrative Fallacy is our tendency to believe in stories that make sense, even when they lack factual support. We crave patterns and explanations, so we construct narratives to make sense of random events—a mental shortcut often discussed in trading psychology. A...
In this week’s Enlightened Stock Trading newsletter we cover: 📈Stock Market Update: What happened in the markets this week ⁉️Scenarios: What could happen next & what to do about it 🧠Trading Psychology: You don’t belong here… and the lies we tell...
Regret aversion is the tendency to avoid making decisions out of fear that the outcome will lead to regret. It’s why people often hesitate to take action because they’d rather avoid regret than face potential loss. This concept is central to behavioral finance...
The Disposition Effect is a well-documented psychological bias where traders tend to sell winning stocks too early and hold onto losing stocks too long. Most of the studies in the field of behavioral finance have attributed this phenomenon to prospect theory, a core...
The Endowment Effect is a cognitive bias where people place a higher value on things they own compared to identical things they don’t. It explains why you might hesitate to sell an old car at a fair market price or why collectors overprice items they own. Recent...
