How Do You Deal with Loss Aversion in Investing?

[Suba]

Loss aversion is a psychological tendency where people prefer to avoid losses (money) rather than risk them in order to achieve greater gains.
The phenomenon of loss aversion is often seen on various television quiz shows, where participants have won a certain amount of money and choose to stop when offered by the host, either to stop and keep the money they've won, or to continue the quiz, risking losing all their winnings. Many choose to stop. Afterward, the host encourages participants to continue the quiz, only to find that the chosen outcome is a car. Naturally, the participant is disappointed that they didn't continue.

In the world of investing, we often encounter loss aversion, such as when we sell an instrument, whether it's stocks or cryptocurrencies, where we sell before the price has reached its peak, thus missing out on a larger profit. Similarly, when buying an instrument before the price has reached its lowest point, we become more conservative. Avoiding losses means we become more conservative as a result of the influence of loss aversion.

 

[Augusta]

A bird in the hand is always worth more than thousands in the bush for me.i love to avoid losses and do with what I have.

 

[eLdavis]

Due to this a lot of people have remained in one spot without moving forward. I think the best approach would be to invest only the amount you are okay with loosing.