Loss aversion is a specific cognitive bias with well-documented emotions of traders, where they feel worse from their losses than pleasure from their gains. It is a type of bias that can ultimately impact how they trade. This type of behavioural finance is so impactful that the US Securities and Exchange Commission (SEC) has dedicated staff members to it.
Loss Aversion
Key Takeaway
Loss aversion is a cognitive bias where traders feel worse from losses than good from gains, even though the losses and gains are of the same amount.
