Disposition Effect
The disposition effect is the urge to lock in small gains quickly while clinging to losers to avoid realising a loss — the opposite of “cut losses, let winners run.” It’s loss aversion in action, and a reliable drag on returns.
The disposition effect is the urge to lock in small gains quickly while clinging to losers to avoid realising a loss — the opposite of “cut losses, let winners run.” It’s loss aversion in action, and a reliable drag on returns.