Glossary › loss aversion
Trading glossary · psychology
loss aversion
Feeling the pain of losing money much more strongly than the joy of winning the same amount.
The fuller meaning
The tendency to feel a loss more strongly than a gain of the same size; a large review of studies put the typical ratio at about 2. In trading it shows up as holding losers in the hope they come back and closing winners early, the disposition effect.
loss aversion.
Related words
anchoring · boredom trading · chasing · cognitive bias · confirmation bias · consistency · cool-down rule · discipline · disposition effect · emotion