Psychology behind trades
The perception that it’s easier to recover losses than to gain is rooted in psychological and cognitive biases. When we incur a loss, our natural response is to take action to get back to our starting point, driven by loss aversion—a concept from behavioral economics suggesting that losses loom larger than gains. This aversion triggers a strong motivation to recover, often leading us to focus intensely and take decisive steps.
On the other hand, gaining involves creating something new rather than restoring a previous state. This requires not only identifying opportunities but also navigating uncertainty and overcoming inertia. Our cognitive biases also play a role; the endowment effect makes us value what we have more than what we might gain, reducing our drive to pursue gains. Additionally, the incremental nature of gains can make them seem slow and insignificant compared to the immediate, tangible nature of recovering a loss.
Therefore, while recovering losses feels like regaining stability and control, pursuing gains demands sustained effort, creativity, and often stepping out of our comfort zones. This psychological dynamic makes recovery appear easier and more straightforward than achieving new successes.#altcoins
