Kenneth Lucas80 Davis

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How does regret avoidance bias manifest in forex trading?

Traders often avoid closing losing trades to prevent feeling regret. Institutions enforce systematic exits, but retail traders freeze, hoping markets reverse. Benefits: persistence can pay off occasionally. Risks: more often, regret avoidance magnifies losses. Example: refusing to close a USD/JPY long during a BOJ intervention leads to massive account damage. Regret is inevitable, but controlled regret prevents disaster. Traders must accept imperfection: not every decision is optimal, but exits preserve capital for the next opportunity.