Joseph Mason T15_ Bailey#88

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What is the sunk cost fallacy in trading?

The sunk cost fallacy happens when traders hold losing trades because they already invested time or money. For example, refusing to exit a bad stock position because of “already waiting too long.” This fallacy locks capital into unproductive trades, preventing better opportunities. The correct approach is treating each trade independently and focusing on forward-looking probabilities. Accepting losses as business costs improves efficiency and prevents capital stagnation.