3 Behavioral Finance Traps (90% Traders Fall For) — Which One Ruins Your Trades?

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2025-11-06
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“The assumption that investors are fully rational actors often does not hold in reality.”

— Robert J. Shiller (2013 Nobel Laureate in Economics, Founding Father of Behavioral Finance)

This isn’t just academic jargon — it’s a truth proven by decades of research into why even smart, experienced traders lose money. Shiller’s work shattered the myth of “rational markets” by showing that our own biases and emotions are the biggest threats to our portfolios. These 3 scientifically-proven traps mess up decisions, and almost everyone falls for at least one!

Ever held a losing stock to “avoid admitting defeat”? Or bought a hyped stock just because others did? Let’s break down the core traps with simple examples — you’ll almost see yourself here!

1. You’re Stuck in Your Own Head (Cognitive Rigidity)

Plainly said: Too stubborn to change your mind, even when the market says you’re wrong.

(Behavioral Finance Term: Cognitive Bias Cluster)

  • Overgeneralizing: Thinking “good company = good stock” (e.g., buying Alibaba/Li Auto for their name, ignoring crash risks).

  • Ignoring New Info: Only reading positive posts about your pick, or clinging to old beliefs (e.g., “Buffett never buys tech” — he owns Apple!).

2. You’re Tricked by What You See (Information Misprocessing)

Plainly said: Misreading info thanks to silly mental habits.

(Behavioral Finance Term: Information Processing Bias)

  • Anchored to One Number: Refusing to sell LULU unless it hits your $400 entry price — even if the stock’s fundamentals are falling apart and it could drop to $250.

  • Treating Money Differently (Mental Accounting): Gambling your bonus on meme stocks (“free money!”) but being scared to invest your salary — even though both are your hard-earned cash.

3. Your Feelings Control You (Emotional Extremes)

Plainly said: Traders swing between two extremes — here’s the split.

(Behavioral Finance Term: Emotional Bias)

  • Fear vs. Overconfidence: Some hold losing stocks for months (fear of loss); others day-trade 10+ times (thinking they’re "market geniuses").

  • Herd Mentality vs. Laziness (Status Quo): Some buy GameStop/AI stocks just to follow the crowd (FOMO); others hold underperforming Ford (F) instead of switching to Tesla (TSLA) — changing feels too much trouble.

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💡Discussion:

  1. Which of these 3 traps have you fallen for the most? (Be honest!)

  2. Share a story: Did one of these biases ruin a trade for you? What happened?

  3. How do you fight these traps? Do you use rules, take breaks, or something else?

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90% Investors Fall For 3 Finance Traps: Are They Secretly Ruining Your Trades?
Behavioral finance isn’t just fancy jargon — it’s why even smart traders lose money. These 3 scientifically-proven traps mess up decisions, and almost everyone falls for at least one! Ever held a losing stock to “avoid admitting defeat”? Or bought a hyped stock just because others did? Let’s break down the core traps with simple examples — you’ll see yourself here! 1. You’re Stuck in Your Own Head (Cognitive Rigidity) 2. You’re Tricked by What You See (Information Misprocessing) 3. Your Feelings Control You (Emotional Extremes)
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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Comments

  • Shyon
    2025-11-06
    Shyon
    情绪绝对是我投资最大的陷阱。当一只股票飞涨时,我经常兴奋不已,拒绝获利了结,相信它会走得更高。这种贪婪让我看不到风险——当我意识到这一点时,锁定收益的机会已经消失了。

    当股票开始下跌时,我倾向于持有,希望反弹。我讨厌把胜利变成失败,但这种犹豫往往会让事情变得更糟——利润消失,我最终陷入亏损。这是一堂关于情绪如何悄悄地凌驾于逻辑之上的惨痛教训,不管我们认为自己有多有经验。我明白了纪律不是关于知识,而是关于实时控制情绪。

    为了管理它,我现在设定了明确的止盈和止损水平,并坚持下去。在固定时间回顾头寸,而不是观察一举一动,有助于我保持冷静,做出更理性的决定。当情绪爆发时,我提醒自己,保护资本总是比追求完美更重要。 @Tiger_comments @TigerStars

  • koolgal
    2025-11-07
    koolgal
    🌟🌟🌟I fell hard for Trap #1 Cognitive Rigidity. Top Glove $Top Glove(BVA.SI)$ was my lesson. 

    I had a stubborn belief that Top Glove was essential. Pandemic or not, rubber gloves were a necessity. 

    I ignored the signs: Oversupply, collapsing selling prices & the labour investigations.

    I misread the news : Earnings miss?  Temporary.  Downgrade? Overreaction.  I filtered reality through my conviction.

    I held on and told myself that it will bounce.  It was a glove giant.  But it didn't.  It kept bleeding.

    I did not just lose money.  I lost clarity.  My belief became a blindfold.  That is the danger of cognitive rigidity : I stop seeing the   hard reality.

    Top Glove taught me that conviction without flexibility is a trap, that even defensive stocks can become dangerous.

    It humbled me and taught me to challenge my beliefs, to respect price action and to listen to the market.  That pain became wisdom. It makes me a better investor.

    @Tiger_comments @TigerStars @TigerClub

  • L.Lim
    2025-11-07
    L.Lim
    3.那是我最大的問題。
    我在沒有密切關注的情況下買入了頂級手套,不得不虧本賣出。

    對於其他觀點,我並不是不合邏輯的,我承認我知道的不夠多,並且總是願意閱讀更多,或者讓其他觀點指導我的行動。我很高興錯過像迷因股票或風險資產這樣快速致富的機會(聽說有人購買特朗普幣並被燒燬令人震驚)

    我相信的另一點是:不要投資於你無法承受損失的東西,尤其是如果你無法集中注意力或閱讀,如果你傾注你的積蓄並失去一切,那將是絕對致命的。

  • TimothyX
    2025-11-06
    TimothyX
    說白了:太固執而不願改變主意,即使市場說你錯了。

    (行爲金融學術語:認知偏差羣集)

    過度概括:認爲“好公司=好股票”(例如,購買阿里巴巴-SW/理想汽車的名字,忽略崩盤風險)。

    忽略新信息:只閱讀關於你的選擇的正面帖子,或者堅持舊的信念(例如,“巴菲特從不購買科技”——他擁有蘋果!).

  • Cadi Poon
    2025-11-06
    Cadi Poon
    “投資者是完全理性行爲體的假設在現實中往往不成立。”

    ——羅伯特·J·席勒(2013年諾貝爾經濟學獎得主,行爲金融學創始人)

    這不僅僅是學術術語——這是一個事實,幾十年的研究證明了爲什麼即使是聰明、有經驗的交易者也會虧損。希勒的工作打破了“理性市場”的神話,表明我們自己的偏見和情緒是對我們投資組合的最大威脅。這三個被科學證明的陷阱會打亂決策,幾乎每個人都至少中了一個!

  • Aqa
    2025-11-06
    Aqa
    [Happy][Happy] I often get “Stuck in my Own Head” thinking “good company = good stock”. I also got “tricked by what I see”, buying meme stock like $Palantir Technologies Inc.(PLTR)$. Many times my Feelings control me and I ended up FOMO making impulsive trades. Exchanging information and shaking my feelings with friends on Tiger Traders App helps keep me in check. Thanks @Tiger_comments @TigerStars @Tiger_SG @TigerClub @MillionaireTiger @Tiger_Academy @icycrystal @GoodLife99 @SPACE ROCKET @CaptainTiger
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