In CFD trading, many users show an abnormal "preference" for the positions they already hold: they are unwilling to close their positions even though the market signal has weakened; varieties that are obviously risky in the eyes of others have "huge potential" in their own eyes. Wmax Behavioral finance research points out that this irrational attachment stems from a classic cognitive bias - the endowment effect: that is, people place a psychological premium on the items they own (including financial positions) above their objective value. Simply put, once you "own" it, you feel it is "more valuable".

Wmax Emphasize that the endowment effect does not originate from greed, but from human beings’ instinctive resistance to “loss”. However, in trading, it will distort risk judgment, causing users to separate "my position" from "market reality", thereby missing the opportunity to take profits or allowing losses to expand.

1. The illusion that “my long orders are different”

The most typical manifestation of the endowment effect is double standards: being rational and calm when evaluating other people's positions, and full of optimism when evaluating one's own positions. Wmax Data shows that when users are asked to give buying and selling advice on the same product, if they hold long orders, their "target price" is 12% higher on average; if they hold short orders, the "bearish space" expands by 18% on average. This deviation is particularly significant in the floating profit state.

What is even more subtle is that users will actively look for reasons to support their positions. For example, after a long gold order makes a profit, users pay more attention to the positives such as "central bank gold purchases" and "geopolitical risks", while ignoring the negatives such as the strengthening of the U.S. dollar and the reduction of ETF holdings. This selective attention further strengthens the illusion that "my position is more reasonable."

2. From “rational evaluation” to “emotional binding”

Over time, holdings will transform from "trading decisions" into "psychological assets." Users began to use subjective indicators such as "cost price", "recovery point" and "number of days of holding" to measure value instead of the current market structure. Wmax It has been observed that many users will say when reviewing the market: "I have held this order for so long, it will definitely rise back." In fact, they mistake the time investment for the basis of value.

This emotional binding can also lead to the sunk cost fallacy: the unwillingness to admit a mistake because of the energy, time, or emotion invested in it. Even if the technical picture breaks and the fundamentals deteriorate, users still insist on "waiting", hoping that the market will "worthy" of their persistence. As everyone knows, the market never cares who is holding it.

3. Why does “owning” mean “better”?

The root of the endowment effect lies in the superposition of loss aversion and identity. Psychological experiments show that the pain caused by giving up an item you already own is far greater than the pleasure caused by acquiring the same item. In trading, closing a position not only means the loss of potential profits, but is also subconsciously interpreted as "the denial of self-judgment."

Furthermore, holdings become part of the user’s self-narrative. "I am a trend trader" and "I am good at buying bottoms", these identity labels make closing a position equivalent to "betraying yourself". Wmax pointed out that true professional trading should treat positions as neutral tools rather than self-extensions.

4. Use “external perspective” to break the self-filter

The key to combating the endowment effect is to simulate the judgment in the “unowned” state. Wmax It is recommended that users ask themselves when evaluating positions:

"If I were in a short position now, would I open an order in this direction?" "If a friend holds this position, would I advise him to continue holding it?"

By introducing a third-party perspective, emotional interference can be effectively stripped away. Wmax The platform supports the "anonymous position evaluation" function: hiding the name and direction of the product, only displaying the technical form and fundamental summary, helping users re-examine it as an outsider.

5. How does Wmax help objective position management?

Wmax Embed multiple “de-endowment” mechanisms into product design:

Neutral review mode: The profit and loss results are hidden by default during review, and only the decision-making logic and market signals are displayed to avoid inferring the results; Position health score: Based on objective indicators such as current volatility, correlation, and technical strength, a 0-100 score is generated instead of relying on the user's subjective feelings; Forced transposition question: When the position floating loss exceeds the threshold, the system pushes: "If this order is held by others, how would you evaluate its rationality?"

These designs do not deny users' feelings, but provide tools to help them break out of "my position is special".

Conclusion: Only by letting go of “possession” can you see the value clearly

The financial market only recognizes prices, not owners. Wmax I always believe that the mark of a professional trader is not persistence in holding positions, but awe of the market.

Because in a rational behavioral framework, the most sober judgment is not "I want it to rise", but "Is it worth continuing to hold it?" - Only by letting go of the endowment filter can we see the true price signal.