Trader Biases

I posted an article yesterday about a particular trading bias known as 'the Endowment effect', this article is one of a series of articles on trader and investor biases that I have written about in recent months. Traders and Investors are affected by a wide range of behavioural biases caused by an array of psychological, philosophical, physiological and sociological factors. These biases, though often subtle, can seriously distort one’s thinking processes and limit their ability to think and act as rationally when it comes to making trading judgments and decisions.

The list of biases which I have written about can be seen below, to view each article just click on the bias.

Loss aversion (Feeling and fearing losses more than the pleasure derived from making and anticipating equivalent gains).

Ambiguity Aversion Bias (Fear of uncertainty or the unknown).

Cognitive Dissonance  (The discomfort caused by simultaneously holding conflicting cognitions (thoughts, ideas, beliefs, values, emotional reactions).

Recency Bias (A tendency to value the outcomes of recent trades over the outcomes of less recent trades).

Confirmation Bias (Seeking views and opinions which confirm one’s beliefs).

Attribution (Self-serving bias) (Accepting the credit for favourable outcomes, whilst blaming unfavourable outcomes on other factors).

Endowment effect (Valuing something more when we own it, than when we do not own it).

This list can also be seen on the tab at the top of this page. As I post new articles, so I will update this list.