Lets play a game. I’m going to ask you a question and let you choose between two options.
Would you prefer to have 10,000 pesos today or 12,000 pesos in one month?
Most of you would take the 10,000 pesos today.
If I asked you again after six months kung alin sana pinili mo noon (6 months ago) yung 10,000 pesos ba or yung 12,000 pesos? You would probably say sana 12,000 pesos na lang.
Tawag dito ay RECENCY BIAS. Isa ito sa mga cognitive biases.
Cognitive biases are systematic errors in our thinking that arise because our minds use heuristics or mental shortcuts, instead of spending the energy required to fully process the concept at hand.
“Recency bias” is the phenomenon of a person most easily remembering something that has happened recently, compared to remembering something that may have occurred a while back.
Look at this chart.
Bumagsak si TECH. Bumagsak ito ng more than 80% then nagbounce. Mula below 4 pesos ay umakyat ito ng more or less 200%. If you have traded this malaki ang chance na you have been a victim of recency bias if you traded CHP after. Look at CHP.
Bumagsak din si CHP ng more than 80% but unlike ky tech nagbounce lang si CHP ng more or less 8% then bumagsak ulit.
If you traded TECH at kumita ka even kahit nanood ka lang sa pag akyat ni Tech at di mo binili. The moment na makita ng brain mo ang gains/profit na pwedeng makuha from a stock that fell more than 80% e reregister niya yun. If nakita mo si CHP which bumagsak din ng more than 80% at nabili mo, malaki ang chance na you will hold on ky CHP kahit pa nahit na sell signal mo or kahit pa bumagsak further si CHP dahil iniisip mo ang nangyare kay TECH na ang laki ng tinaas.
Recency Trading Bias. This is when you only focus on recent trading decisions, or the most recent outcomes, be they successful or not.It means you’re abandoning logic and a solid trading strategy because you’re running on emotion. This myopia increases the likelihood of a future loss.
Ano ang solusyon dito? Fresh Start! Approach every trade with a fresh start. You can counter recency bias by approaching every trade as a fresh one and reminding yourself of your broader goals. Every trading day dapat wala kang opinion sa mangyayare sa stock na hawak mo. Hayaan mo na si market ang magsabi kung saan pupunta ang price ng hawak mo. If nahit ang sell signal mo e benta mo. If hindi na hit e hold mo lang.
If you want to learn more about stock trading join our Facebook Group called Trader’s Lounge.
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We also have weekly lessons over there. We created different trading strategies like MAMA which made a lot of traders profitable. Other trading strategies include FISHBALL, PAPA, CALMA and more. We want to offer OFW’s, Employees and all Filipino people a chance to learn without paying a cent.
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Come join us. Let us push free learning.