Quote from: South Park on August 01, 2019, 01:48:04 AM

Quote from: deisik on July 26, 2019, 08:54:38 AM

Quote from: harizen on July 11, 2019, 05:08:02 PM

About some individuals, these people are only looking on a single and not on a whole forest. They worried too much about how the price decrease without realizing how much it grows prior to price dip

This is definitely not about "some individuals"

As it is more about all of us because this is how human mind and brain work in general. Our expectations of the future events (in this case, Bitcoin's price) are intuitively based on, and subliminally affected by, the most recent happenings. So even if we know for certain that the last price decrease is only a minor correction, we still feel worried or even terrorized by this drop

It has more weight for our internal decision-making machinery simply because it is closer to us and thus influences us stronger. In other words, recent events have more weight than remote ones even though the former are temporary while the latter are here to stay (and despite the fact we may actually know that)

That is called the recency bias and for a trader it is one of the worse biases we may have, one perfect example was the bubble of 2017, when the price reached the top and began to go down many traders instead of taking their profits thought the price will continue to climb and they began to buy even more coins, then when it finally became clear we were in a downtrend instead of selling they held because the previous high price was still too fresh in their minds and we know the horrible losses they suffered as a result of that bias

Trading is essentially a form of reality check for us all

We may form some ideas about future price action (mostly delusions even if correct) based on our prior beliefs which essentially have nothing to do with market and its laws. And what adds insult to injury here is that we actually feel being right about our decisions even if they were proven wrong time and again in the past. We just can't first understand and then internalize (i.e. make it an integral part of our belief system) this sad discrepancy because it is so strikingly against everything we have been internally hard-wired for and equipped with by Mother Nature