I gathered a list of different fallacies that can/will cloud your trading decisions, which I think everyone should be aware of – and tried to apply it to crypto.

Anchoring:

The first thing you judge influences your judgement of all that follows.

“The price just dumped/pumped, must be a shit/great coin”

Confirmation bias:

You favor things that confirm your existing beliefs

“This guy says my biggest holding will pump so he’s prob right”

Backfire effect:

When your core beliefs are challenged, it causes you to to believe even more strongly

“The price is dumping, a huge pump must be imminent!”

Declinism:

You remember the past as better than it was, and expect the future to be worse than it likely will be

“2018 was great, everything was green even when it crashed!”

Sunk cost fallacy:

You irrationally cling to things that have already cost you something

“Yes its an obvious rug pull but I’m down 5% so I cant sell now”

Dunning-kruger effect:

The more you know, the less confident you will be (and vice versa)

“I’ve been in this game for THREE DAYS, I think I know a thing or two about spotting a bear trap”

In-group bias / (bandwagon effect)

You unfairly favor those that belong in your group / Ideas, fads and beliefs grow as more people adopt them

“Everyone in my BTC 2 DA MOON FB group / mainstream media says it will reach 1m so it must be true”

The Halo effect/authority bias

How much you like someone, influences your other judgements of them – we trust and are more influenced by the opinion or authority figures

“Elon says pump, I say how high!”

Belief bias;

If a conclusion supports your existing beliefs, youll rationalize anything that supports it

“Mcaffee says BTC will reach a million? I concurr”

Groupthink:

You let the social dynamics of a group situation override the best outcomes

“/r/CC says it’s a bear market, time to sell everything!”

Optimism/pessimism bias

You overestimate the likelihood of a positive/negative outcome

“I’m OK with the events that are currently unfolding” / BTC dropped 10 bucks crypto is dead!!“

Reactance:

Youd rather do the opposite of what someone is trying to make you do

“DCA ey? All. In.”

Curse of knowledge:

Once you understand something, you presume it to be obvious to everyone

“Once POW migrates to POS the ethernet wallets will algoritmically softfork and consensus the solidation price”

Self serving bias

You believe your failures are due to external factors, yet youre personally responsible for your successes

“I’ll have you know I bought DOGE at the perfect fibonacci, it would pump if it werent for the power outage in Mogadishu”

False consensus:

You believe more people agree with you than what is actually the case

“11 upvotes, I must be onto something big!”

Naive realism / Blind spot bias

You believe that you observe objective reality, while everyone else is irrational, uninformed or biased / We dont think we have bias, and see it in others more than ourselves

“Damn all these paid shils shitting on the FreeWilly coin!”

Gamblers fallacy:

You believe future outcomes are affected by past events

“BTC will dumps/pumps again when Chinese New Year”

Survivorship bias:

We focus on the things that survived a process and overlook the ones that failed.

“All the current top 10 coins were on my watchlist at one point. It’s a gift”

Cryptomnesia

We mistake real memories for imagination

I dont have an example for this, just loved the name lol

Clustering illusion

We find patterns and clusters in random data

“BTC always pumps the third tuesday within a week before or after it rains”

Fallacy fallacy

You presumed that because a claim has been poorly argued, or a fallacy has been made, that the claim itself must be wrong

“This reddit post says I just think BTC will pump cause it confirms my existing beliefs, so it will prob dump”

There are heaps more that are applicable to trading, but it already got way longer than intended. Please do add any additional ones in the comments or correct me if ive got some wrong (narrator: he had).

Merry unbiased trading!

​

E: More from /u/il_duomino

Defeatist

Assumption there's nothing else you can do but wait

"The market is down by so much, my investment is so much smaller than I thought. It's nothing. I'll leave it for now. Maybe forget about it. At least not look every day. Better days will come .. maybe.."

Flipflopper

You can't decide on one strategy and instead change every couple weeks

"This is a dip. So I'll DCA… Oh no, it goes real deep. I'll sell.. Ah we're going up! Fuck DCA, ALL IN! Ah, we've plateaued! Great a new resistance. More money! Ah crap, it's dipping.. I'll sell some.."