This article has been translated from English to Gen Z Slang.

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Yo, trading and biases go together like peanut butter and jelly. 🥜 Mainly 'cause we're all vibing off data trends predicting market moves.

But, some biases low key mess with our decision-making, making things hazy when we're trying to read the market like tarot cards. 🔮

The most OG biases are:

  • Recency bias: It’s all about that newest tea, ignoring the whole story
  • Confirmation bias: Only listening to stuff that hypes up our current mindset
  • Herding bias: Rolling with the squad, afraid to veer off the group chat
  • Attribution bias: Flexing about the wins but blaming the Ls on the universe

In his book “Thinking Fast and Slow“, OG Daniel Kahneman spills the tea on more biases that be tweaking human vibes. Check out the ones that mess with trading:

1. Loss Aversion

Ever ghosted on a trade that low key had potential 'cause life’s been serving you Ls lately? 😔

Loss aversion is when dodging Ls feels safer than chasing Ws. But remember, to level up in trading, you gotta play risky to snag the doughnut! 🍩

For the squad dealing with a losing streak, a $100 loss feels like a bruise from the haters, making us too cautious.

2. Hindsight Bias

Kahneman talks about when people act like they knew the vibes all along... after the drama’s already gone down. Like when someone’s all “OMG, I KNEW IT!” 🤯

This kind of bias can throw shade on learning 'cause it makes everything seem predictable, boosting overconfidence in your third-eye powers instead of reflecting on lessons learned. 🔍

3. Anchoring Bias

This one's like recency and confirmation bias' cousin. People cling hard to the first info they catch (that "anchor").

Like if you see $1k on some kicks, suddenly a 20% off sale seems bangin'. 👟

In trading, this bias pops up when leaked deets sway the mood for events, making folks tune out newer, spicier info.

4. Availability Heuristic

This one’s about judging how likely stuff is based on how easy it is to think of examples, kinda like relying on juicy gossip over hard facts. 🗣️

This can make people overhype rare dramas (like plane crashes or shark bites), forgetting about everyday stuff (like traffic jams) that doesn't hit as hard.

In trading, availability heuristic hits when investors flip out over recent flashy headlines, maybe choosing to ditch solid risk management for a hot take.

Knowing about these biases helps you step back and stay woke, so your trades aren't running on distorted vibes. Realizing a bias is at play can help you finesse more rational moves. 💡