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Glossary · PSX term

Anchoring.

Anchoring is fixating on one reference number, like your purchase price, when making decisions.

Definition

Investors often anchor to what they paid and refuse to sell a falling stock until it returns to that price, ignoring current fundamentals. The market does not care about your entry price, so anchoring can lead to poor choices.

Worked example

Refusing to sell a weakening stock until it gets back to your Rs. 150 buy price is anchoring.

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Loss aversion
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Disposition effect
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