Behavioral Principle
Anchoring
The mind clings to the first number it sees, then judges everything else relative to it.
Canonical source: Tversky & Kahneman, 1974
Articles studying this principle
When Lower Highs Whisper: The Anchoring Bias Traders Miss.
Markets often reveal a change in character through small structural shifts long before a reversal becomes obvious. Traders miss those signals when they judge each candle separately, anchor to the previous high, and fail to recognize the sequence forming in front of them.
The Overconfidence Delusion: Why Intelligence Doesn't Protect You from Bad Decisions
Intelligence doesn't eliminate cognitive bias—it often disguises it. Overconfidence can lead even experienced investors, entrepreneurs, and professionals to underestimate risk, overestimate their knowledge, and mistake confidence for competence. Understanding this psychological trap is essential for better decisions in markets and beyond.