2026-01-15 13:28:15

I recently discovered a core issue in my trading: an aversion to losses that exceeds expectations.

After a deeper analysis, the root of this mindset is not mysterious and can be summarized into three main aspects. The most critical is the continuous amplification effect of the "endowment effect"—once holding a position, one overestimates its value, leading to a much greater psychological resistance to cutting losses than rational judgment. This cognitive distortion makes traders easily fall into the vicious cycle of "holding on stubbornly," ultimately only able to accept larger losses.

This is not just a personal problem but a psychological trap faced by the vast majority of retail traders. To break through, the key is to establish risk management rules in advance and use discipline to suppress emotions.

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RetroHodler91

· 20h ago

Death and struggle always come at a cost. I've jumped into this pit too many times. The endowment effect is really strong; holding onto it makes you feel it's a treasure. If I had known that cutting losses would be so painful, I would have set a stop-loss from the beginning. Discipline is easy to talk about but hard to practice. The pain of cutting losses versus being trapped until you break down—it's really a choice between two options. That's why most people die not in the market but in their mindset. Pre-set rules are the life-saving straw; you can't rely on willpower to fight greed. I'm currently being repeatedly educated by this vicious cycle, and I realized too late.

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ILCollector

· 20h ago

The endowment effect is really amazing; holding a pile of shit and still claiming it's gold, it's hilarious. You have to endure this problem to truly understand; you'll regret it when your account hits rock bottom. Discipline suppressing emotions sounds easy, but who the hell can do it when it's time to cut losses? What to do, it still takes a few lessons to truly understand. I found that retail investors are naturally magnets for psychological traps. Making rules is easy, but when it comes to executing them, the brain just shorts out. That's why big players make money while small retail investors lose; emotions are just too deadly.

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ForkMonger

· 20h ago

lmao endowment effect is just the market's way of selecting out the weak hands... most traders won't survive because they refuse to accept their positions are already dead on arrival

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gas_fee_trauma

· 20h ago

Cutting losses is really too difficult, every time I watch the price drop and just can't bring myself to sell, then… I suffer huge losses. The disposition effect is incredible, holding trash coins and thinking they will rebound, a classic case of self-deception. Basically, it's a lack of execution. No matter how good the rules are written, once emotions take over, everything is forgotten. This psychological trap is really common. Nine out of ten people trading cryptocurrencies around me keep repeating this mistake. The key is to first recognize that you will incur losses, then set a stop-loss and stick to it. Otherwise, you'll be stuck in this cycle forever.

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