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Trius Therapeutics, AŞ Message Board

  • rick449 rick449 Apr 3, 2013 4:32 PM Flag

    Hey fellow $TSRX investors

    Here are some Cognitive biases that I feel users who follow the message boards suffer from occasionally. Myself included.

    1. Confirmation Bias

    This is a fatal flaw of trading; we tend to surround ourselves with information that validates our own point of view and dismiss input that conflicts with our reasoning (also known as cognitive dissonance).

    2. In-Group Bias

    This is a manifestation of confirmation bias, or the tendency to surround ourselves with those who share similar takes on the stock. Not only does this provide a false sense of security in our individual viewpoints, it makes us suspicious—or angry—with outsiders who dare to question how we feel about our stock.

    3. Post-Purchase Rationalization

    One of our Ten Trading Commandments is that the definition of an investment should never be a trade gone awry. Nobody initiates market exposure expecting to lose money, but we should never post-rationalize our risk (such as ignoring stop-losses or throwing good money after bad). We would be wise to remember that good traders know how to make money but great traders know how to take a loss.