Modules for Investors
Investment Biases - Part 2
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Avoiding my losses
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Measures to avoid losses and "Losses are larger than profits." Meaning of this proverb.
Avoiding my losses In investment, people are more willing to take risks to avoid a loss than to make a gain. Pain of losing is psychologically about twice as powerful as the pleasure of gaining. Recovery bias is an important concept associated with prospect theory and is encapsulated in the expression “losses loom larger than gains”. Survivorship bias is the tendency to view the performance of existing stocks or funds in the market as a representative comprehensive sample without regarding those that have gone bust. As much as we like to think we’re open-minded and impartial, a ton of different biases are continually influencing us. This doesn't mean we cannot control it. To help you understand more about other investment biases, we are here to help you. To know more and learn about it -- Read about Investement on Smart Money by Angel Broking.