Mental biases

• Description: A successful trade or correct prediction of price movement activates dopamine in the brain—a chemical associated with feelings of reward. The brain becomes accustomed to the reward and creates an addictive behavior pattern.

• Example: After making a profit from a quick trade, we feel euphoric and want to trade again.

• Description: Losses hurt more intensely than gains of the same amount bring pleasure. This imbalance in emotions often leads to hasty and risky decisions, as traders try to recover their losses as quickly as possible.

• Example: PWhen we lose, we increase the risk in order to "get our money back" instead of acting according to plan.

• Description: People tend to sell winning positions quickly (to "lock in profits") and hold on to losing positions (to avoid acknowledging losses). 

• Example: You sell something at a profit of +10% to "secure your profit." But you hold on to another losing position with -30% for years, hoping that it will "come back."

• Description: The desire to earn as much as possible forces us to hold positions longer than is rational.

• Example: The price is rising sharply, the profit is decent, but instead of taking your winnings, you wait for "even more" – and then the crash comes.

• Description: Constantly monitoring the market, notifications, and fluctuations causes mental exhaustion, leading to impulsive or detached decisions.

• Example: After watching the chart for 10 hours, you make a senseless purchase "just so you have something."

• Description: Fear of future regret paralyzes us—we prefer to do nothing.

• Example: You hesitate to enter a store that meets your criteria because you are afraid that it will turn out badly.

• Description: People overestimate their skills and knowledge of the market. They often trade too frequently, take too many risks, or believe that they "know more than the market."

• Example: A new investor with a few profitable trades in Bitcoin starts trading with leverage or speculating on derivatives.

• Description: An emotion that leads to rash decisions, especially during a market downturn.

• Example: Investors panic and sell at a loss to "save what they can," even though patience could bring recovery.

• Description: The tendency to attribute greater value to assets we own simply because we own them. This leads to a reluctance to sell them, even when it is rationally advantageous to do so.

• Example: An investor holds onto a cryptocurrency even though it is falling in value and the situation has actually worsened, because they have had it for a long time.

• Description: Attempting to quickly "recoup losses" after an unsuccessful trade, often in an emotional state.

• Example: After a loss, the investor immediately opens another risky position in order to recoup the money, instead of analyzing what went wrong.

• Description: We only see successful examples because unsuccessful ones are not visible, and so we have exaggerated expectations of returns.

•  Example: On YouTube, we only see familiar stories of successful investors.

• Description: We only seek out information that confirms our opinion. Underestimating risks, ignoring warning signs. 

• Example: Investors believe in the "altcoin season effect" and ignore negative analyses.

• Description: We fixate on a certain price or value (e.g., purchase price), which prevents us from objectively assessing the current situation.

• Example: An investor says to himself: "I'll sell when it returns to CZK 100," even though the fundamentals and market conditions have changed in the meantime.

• Description: The illusory belief that we could have predicted an event, even though this was not actually the case.

• Example: After the price of a cryptocurrency falls, an investor says, "I always knew it would crash," even though they had no clear evidence of this beforehand.

Description: We attribute success to our own cleverness and mistakes to external circumstances. Investors thus fail to learn from their losses.

• Example: When the investment pays off, you say: "I was right." When it doesn't, you claim: "It was Putin's fault."

• Description: The mistaken belief that if something has been going on for "too long," the opposite must happen. Making decisions based on intuition about "what should happen"—like a casino player waiting for red to finally come up after black.

• Example: ETH has been falling for 5 days. You say to yourself: "Now it has to go up." But the market is not guided by the past.

• Description: We treat money differently depending on its "origin" – we perceive investment profits as "disposable income" with which we are more willing to take risks, while we protect our wages and savings more.

• Example: An investor bought cryptocurrency for USD 10,000. It rose to USD 18,000, and he says, "It's just extra profit, so I can risk more with it."

• Description: Believing that one has an informational advantage over others due to one's own knowledge reinforces a sense of control and leads to overconfidence and greater risk-taking.

• Example: We believe that thanks to our "strategy," we can detect market movements, even if they are purely random events.

• Description: People tend to seek out and believe stories that "make sense" because the brain likes simple things—and often prefers them to complex but more accurate data.

• Example: You invest now because the cryptocurrency story "sounds good"... But in the end, the numbers don't add up.

• Description: Recent events carry more weight than historical trends. Excessive optimism/pessimism following short-term fluctuations.

• Example: After a bear market, people are afraid to enter, even if prices are favorable.

• Description: Fear of missing out on a lucrative opportunity that could bring quick profits, leading to ill-considered trading.

• Example: An investor sees rapid growth in the price of a cryptocurrency and buys it without analysis because they fear they will miss out on the opportunity to profit. 

• Description: We follow others because "if everyone is doing it, it can't be wrong." Buying in bubbles, selling in panic.

• Example: FOMO during the rise of Bitcoin or stocks such as GameStop.