Behavioural Finance

Gambler's Fallacy

Definition

What is Gambler's Fallacy?

Believing that independent random outcomes must soon reverse after a streak.

Example in practice

A trader assumes a falling share must rise because it has declined five days in a row.

Keep learning

The tendency to feel losses more strongly than equivalent gains.

The tendency to overestimate one's knowledge, forecasting ability, or control.

The tendency to seek or interpret information that supports an existing belief.

Incorporating environmental, social, and governance factors into investment analysis or ownership.

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