Atlas of Cognitive Biases #42 · Gains, losses and risk. Fear of regret is a decision too
What it looks like in trading
skipping a planned trade “because what if it doesn't work…”
holding a loser so you won't regret closing just before the bounce
exiting too early so you won't regret giving back profit
An example from a session
The plan says “entry on a VAL test with acceptance”. The trader hesitates, because a similar entry lost yesterday. Price moves according to the plan without them. The regret of not acting turns out to be just as strong.
What the research says
Kahneman and Tversky (1982) showed that people anticipate more regret after a loss caused by acting than after the same loss caused by not acting. Ritov and Baron (1990) described omission bias in vaccination decisions.
Avoiding decisions that could cause regret. It often goes together with omission bias: harm resulting from action hurts more than the same harm resulting from inaction.
How does regret aversion show up in trading?
Typical signs: skipping a planned trade “because what if it doesn't work…”; holding a loser so you won't regret closing just before the bounce; exiting too early so you won't regret giving back profit.
Educational content, not psychological advice or an investment recommendation.