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Loss aversion
In one line: Losing hurts more than winning feels good, so people treat gains and losses differently.
Evidence
Kahneman and Tversky (1979): people judge outcomes as gains or losses against a reference point; losses weigh more than equal gains. People tend to play safe with gains and gamble with losses.
Kahneman and Tversky (1979): people judge outcomes as gains or losses against a reference point; losses weigh more than equal gains. People tend to play safe with gains and gamble with losses.
More videos on this (2)
- Fear of Losing Money: 5 Trading Steps to Stay Calm · Stick Trader · external
- 12 Psychology Theories That Explain Why Traders Keep Making the Same Mistakes · Stick Trader · external
It explains a lot of trading behaviour: holding a loser 'until it comes back', or moving a stop further away. See also Disposition effect and Revenge trading (after a loss).
Further viewing
External videos are for viewing only: we don't use them as a factual source.
External video, for viewing onlyFear of Losing Money: 5 Trading Steps to Stay Calm
Stick Trader · open on YouTube
Stick Trader · open on YouTube
External video, for viewing only12 Psychology Theories That Explain Why Traders Keep Making the Same Mistakes
Stick Trader · open on YouTube
Stick Trader · open on YouTube
Related
Sources & studies
Last checked: 2026-11-04 · Educational, not financial advice.
Education only, not financial advice. No signals. Backtests are hypothetical: real trading can be worse. Past results don't predict future results.